South Africa | VAT Will Remain at 15%, a Boost for the Country’s Tourism and Hospitality Sector

South Africa’s National Treasury has confirmed that the VAT, Value - Added Tax rate will remain at 15%, halting a proposed increase that had raised concerns across the tourism and hospitality industry

The decision follows legal and political pressure, including a court application by the  DA, the Democratic Alliance to block the VAT hike with the support of EFF, the the Economic Freedom Fighters, leading to a negotiated settlement and the Western Cape High Court’s involvement underscored the issue’s significance, with the Democratic Alliance’s settlement with the National Treasury of South Africa paving the way for the reversal.

The reversal follows Finance Minister Enoch Godongwana’s decision to withdraw his earlier plans for a 0.5% VAT rise on 1st May 2025, followed by another in April 2026 and the change set to be formalised through forthcoming legislation.

The proposed VAT Increase had raised alarms in the hospitality sector, with fears that higher cost would deter tourists and strain businesses still recovering from the economic impacts of recent years.

Maintaining the current VAT rate at 15% is expected to keep the country as a competitive travel destination, supporting hotels, the entire hospitality industry, restaurants, the catering sector, travel agencies, tour operators, and related businesses that form the backbone of the tourism economy and it’s undoubtedly a boost for the country’s tourism industry sector.

While the Treasury acknowledged a R75 billion medium - term fiscal gap, as a result, the move offers stability for the tourism industry, which depends on affordability to remain competitive.

Industry leaders have welcomed the development, citing its critical role in job creation, economic recovery, providing stability and ensuring to continue offering competitive prices to attract visitors.

Link - https://atta.travel/resource/south-africa-keeps-vat-at-15-easing-pressure-on-tourism-sector.html