Major tax changes to watch out for in 2025
With South Africa’s tax collection shortfall expected to be around R22 billion, the National Treasury will be considering a host of tax proposals to be included in the 2025 Budget.
Treasury has already indicated that many tax incentives have been and will continue to be reviewed in years to come.
It has also also called for stakeholders to submit tax proposals for consideration in the main budget.
One key proposal that has gained traction is a wealth tax, which is back in the headlines after the National Treasury said it was analysing data from the South African Revenue Service (SARS) as part of a wealth tax consideration.
Specifically, the National Treasury is assessing information on South African high-net-worth individuals a wealth tax will target.
Chris Axelson, Treasury’s acting head of tax and financial sector policy, said SARS collected information on individuals holding assets valued at R50 million or more.
He said this information gives the National Treasury and SARS a better picture of the wealth within South Africa and a potential wealth tax.
The revenue service also established the High Wealth Individual Unit in 2021 to consolidate data on wealthy taxpayers through third‐party information.
“This will assist in broadening the tax base, improving tax compliance, and assessing the feasibility of a wealth tax,” the Treasury said.
Deborah Tickle, an independent tax analyst, told SABC News that a new wealth tax could take two forms:
- A percentage of the wealth of a person at a particular time.
- A presumptive tax assumes a return on a person’s wealth.
Another key tax move that is definitely coming—it remains a question of when—is the removal of medical aid tax credits, which will ostensibly used to fund the National Health Insurance scheme.
The National Department of Health recently revealed the timelines for the first phase of the NHI, which is expected to run through 2026. The funding of the scheme is only expected to kick in after 2028.
However, it has already been pre-determined that the removal of medical aid tax credits is part of the funding mechanism for the scheme and could draw in around R40 billion to the budget. As such, a proposal to remove them in 2025 has also been put forward for consideration.
It must be noted that these are just proposals and there is no indication that any will be implemented in the budget.
According to the National Treasury, these are the key tax measures being considered for 2025.
- Increasing the number of VAT zero-rated items;
- Increasing the headline corporate income tax rate to 28%;
- Stronger measures to combat illicit financial flows;
- Introducing a progressive net wealth tax on high-net-worth individuals, and financial transactions taxes;
- Increasing PIT on high-income earners, along with increases in inheritance, estate, and luxury import taxes;
- Reducing tax evasion by, and reducing/eliminating tax breaks for high-net-worth individuals;
- Acceleration of measures to close existing tax loopholes;
- Removal of medical tax credits;
- Systematic review of tax incentives and removal of ineffective incentives;
- An increase of the Health Promotion Levy to the recommended 20%; and annual inflation-related increases thereafter.
The Budget 2025 date has not yet been officially set, but it typically happens near the end of February, after the president’s State of the Nation Address.
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