{"id":851846,"date":"2026-02-24T07:23:27","date_gmt":"2026-02-24T05:23:27","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=851846"},"modified":"2026-02-24T07:23:30","modified_gmt":"2026-02-24T05:23:30","slug":"the-vat-increase-businesses-are-begging-for-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/budget-speech\/851846\/the-vat-increase-businesses-are-begging-for-in-south-africa\/","title":{"rendered":"The VAT increase businesses are begging for in South Africa"},"content":{"rendered":"\n

Lula has again called on Finance Minister Enoch Godongwana to increase the VAT threshold for businesses during the 2026 National Budget. <\/p>\n\n\n\n

The small business funder has asked Godongwana to increase the compulsory VAT registration threshold from R1 million to R3 million to unlock liquidity within the SME sector.   <\/p>\n\n\n\n

Lula has previously noted that small and medium-sized enterprises (SMEs) account for roughly 40% of South Africa’s GDP.<\/p>\n\n\n\n

The VAT registration threshold has been stagnant at R1 million for 16 years. R1 million in 2009 is worth around R2.2 million today, adjusted for inflation. <\/p>\n\n\n\n

Garth Rossiter, Chief Risk Officer at Lula, said that the R1 million VAT threshold remains a “glass ceiling” that disincentivises small business expansion. <\/p>\n\n\n\n

This comes despite a favourable economic climate, with growth estimated to increase, inflation stabilising and improved business confidence. <\/p>\n\n\n\n

Rossiter said that the current threshold forces many small business owners to choose between growth and administrative survival.<\/p>\n\n\n\n

“We are seeing a trend where businesses intentionally cap their productivity to stay under the R1 million mark,” said Rossiter.<\/p>\n\n\n\n

“Whether it is a psychology practice choosing to consult four days a week instead of five, or a specialised dry-cleaning business turning away new contracts, the message is the same: the cost of VAT compliance often outweighs the benefit of marginal growth.” <\/p>\n\n\n\n

Rossiter has thus called for the threshold to be increased to R3 million, which he said could instantly unlock the productivity of thousands of SMEs. <\/p>\n\n\n\n

Lula argued that the long-term fiscal benefits of the move would far outweigh the immediate loss of VAT revenue.<\/p>\n\n\n\n

It said the economy would eventually benefit from increased corporate tax revenue from higher profits and expanded employment, as businesses scale without the current complex monthly filing systems.<\/p>\n\n\n\n

More than taxes are needed<\/h2>\n\n\n
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Beyond tax reform, Rossiter confirmed that the 2026 Budget will need to signal a shift toward long-term infrastructure certainty. <\/p>\n\n\n\n

For many SMEs, the “basics” remain some of the biggest hurdles, with services not being delivered. <\/p>\n\n\n\n

“Government\u2019s role is to create a conducive environment so that the private sector can do the job of creating employment,” said Rossiter. <\/p>\n\n\n\n

After submitting a proposal in late 2025, Lula received feedback that the proposal would be considered in the 2026 Budget cycle. <\/p>\n\n\n\n

Rossiter said that the Budget is the perfect time for the government to show that it is serious about clearing obstacles to economic activity. <\/p>\n\n\n\n

“In an election year, the focus often shifts toward short-term spending or quick fixes. However, the SME sector needs a move away from constant firefighting toward a predictable, long-term plan,” said Rossiter. <\/p>\n\n\n\n

“While some emergency measures, they aren’t a growth strategy. We need a longer-term plan for energy and water expansion that businesses can actually bank on.” <\/p>\n\n\n\n

President Cyril Ramaphosa recently announced that R50 billion would be invested in digital infrastructure, including 55 data centres.<\/p>\n\n\n\n

However, Lula noted that there is a contradiction: data centres require vast amounts of power. A digital economy thus needs energy to keep growing. <\/p>\n\n\n\n

“To protect that R50 billion investment and prevent more load-shedding, we need a growing energy supply with clear milestones and real accountability,” Rossiter added.  <\/p>\n\n\n\n

“A business-friendly budget is the most sustainable way to build pro-government sentiment and investor confidence.” <\/p>\n","protected":false},"excerpt":{"rendered":"

Lula has called on Finance Minister Enoch Godongwana to increase the VAT registration threshold for businesses. <\/p>\n","protected":false},"author":95,"featured_media":816536,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13716],"tags":[20514],"class_list":["post-851846","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budget-speech","tag-lula"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/851846","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=851846"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/851846\/revisions"}],"predecessor-version":[{"id":851858,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/851846\/revisions\/851858"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/816536"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=851846"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=851846"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=851846"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}