Big Question Over South Africa’s VAT Reversal: Is It Really a Done Deal?

The Finance Minister’s surprise announcement that the controversial 0.5% VAT hike will be reversed has stirred celebration across South Africa—but legal experts are warning that the move is far from final.

In what many have interpreted as a political win for opposition parties like the Democratic Alliance (DA) and Economic Freedom Fighters (EFF), the National Treasury gazetted its intention to withdraw the increase and introduce a new Rates and Monetary Amounts Bill (Rates Bill) that excludes the hike.

But as Bartho van Tonder, a director at Thomson Wilks Attorneys, explains, the announcement alone doesn’t make it a done deal.

Not So Fast: Legal Hurdles Remain

According to Van Tonder, the Finance Minister does not have clear legal authority under Section 7(4) of the VAT Act to reverse a rate change once announced—at least not without parliamentary endorsement or court intervention.

“The announced rate change would either be endorsed or changed through Parliament,” he said. “And with the VAT rate scheduled to increase to 15.5% next Thursday (1 May), there simply isn’t enough time to reverse the hike through regular legislative channels.”

This means the hike could still legally take effect—unless a court intervenes or Parliament acts with extraordinary speed.

The Court Option: The Only Sure Path?

This legal limbo is what prompted the DA and EFF to seek urgent court orders to stop the VAT hike. At the heart of their argument is the alleged procedural irregularity in the adoption of the Fiscal Framework, which includes the 0.5% VAT hike.

“If the court sets aside the Fiscal Framework,” Van Tonder explained, “it effectively nullifies the VAT increase as part of the broader revenue plan.”

A ruling is expected by 29 April, just two days before the VAT hike is meant to take effect.

In a twist, the DA confirmed that lawyers representing the Finance Minister have approached them for a possible out-of-court settlement. While details remain unclear, it suggests the government may be looking to avoid a courtroom showdown.

Political Victory… Or Premature Celebration?

Meanwhile, political parties like the DA, EFF, Action SA, and Build One South Africa (BOSA) are claiming victory over the VAT hike, pointing to the Treasury’s reversal announcement as proof of their pressure paying off.

But as Van Tonder points out, “The Finance Minister’s statement is a political gesture until it’s backed by proper legal or parliamentary action.”

In the meantime, South Africans are left wondering: come 1 May, will they be paying 15.5% VAT or not?

All eyes are now on the courts and Parliament. The clock is ticking, and unless there’s swift legal or legislative action, retailers and consumers alike may face confusion at tills nationwide.

{Source: Business News}

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