The South African 2025 Budget Speech, which caused tremendous uproar following its initial postponement has been tabled. Among other key aspects relating to budget allocations and revenue collection, there are several key tax amendments and anticipated legislative changes aimed which could impact cross border tax relations. We have highlighted a few Below major developments and legislative changes to look out for:

Key Tax Amendments which are effective:

• Value-Added Tax (VAT): The VAT rate will increase to 15.5% on 1 May 2025, with a further increase to 16% from 1 April 2026.
• Personal Income Tax: Personal income tax brackets and rebates will not be adjusted for inflation in the 2025/26 financial year, resulting in fiscal drag and increased tax burdens for individuals whose incomes rise with inflation.
• Transfer Duties: To account for inflation, the monetary thresholds for transfer duties will be adjusted by 10 per cent, providing some relief to property buyers.
• VAT Zero-Rating: New zero-ratings on essential food items have been introduced to support low-income households. These include specific edible offal, specific meat cuts, unflavoured dairy liquid blends, and specific canned vegetables.
• Excise Duties: Excise duties on cigars and pipe tobacco will rise by 6.75%, while cigarettes and other tobacco products will see a 4.75% increase.
• Fuel Levies: There will be no changes to the general fuel levy and road accident fund levy, offering some relief to motorists amid rising living costs. 

Anticipated Legislative Changes:

• Cross-Border Retirement Funds: Section 10(1)(gC) is set to be reviewed to address double non-taxation where South Africa holds taxing rights under a tax treaty.
• Controlled Foreign Companies (CFC) Rules: it is proposed to refine the comparable tax exemption by ensuring that tax refunds, from foreign jurisdictions, to shareholders are considered when applying the exemption.
• Trust Income and Non-Residents: Sections 7 and 25B of the Income Tax Act will be reviewed to address potential unintended consequences in the tax treatment of income and assets vested in non-resident beneficiaries of trusts.
• Tax Disputes: The concept of “bona fide inadvertent error” will be explicitly linked with “substantial understatement” to ensure greater clarity and consistency in tax dispute resolutions.
• Tax Clearance Status: SARS will review the interaction between its tax compliance status system and its entity scoring model to identify potential synergies and improve administrative efficiency. This may lead to an amendment to the process of obtaining SARS Tax Clearance Status

Based on the above proposals for anticipated legislative changes, National Treasury and SARS will prepare the draft amendment legislation – Draft Taxation Laws Amendment Bill (TLAB) and the Draft Tax Administration Laws Amendment Bill (TALAB). These will be issued for public comment between June and August 2025. Once comments have reviewed by National Treasury, an explanatory memorandum will released with the revised bill.

These changes reflect the government’s ongoing attention on expats and collection sources which are foreign to South African sources of income. Those living and working outside of South Africa should take note of the anticipated development and book a call to understand their potential impact and ensure compliance with the evolving tax landscape.

Written by: Khutso Makgoka, Admitted Attorney & Global Tax Specialist