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As we approach the 2026 Budget Speech, it’s worth reflecting on the events of 2025, which were, to say the least, eventful. The delayed presentation and the eventual abandonment of a proposed VAT rate increase left many taxpayers in a state of uncertainty.
This year, we hope for a smoother and more predictable presentation, providing taxpayers with much-needed clarity on the way forward. Here’s what we anticipate from a taxation perspective:
1. Broad-Based Tax Hikes Unlikely
We do not expect significant tax increases, particularly in areas such as VAT. Instead, Treasury is likely to focus on improving administrative efficiencies, compliance, and enforcement to bolster revenue collection.
2. Increased SARS Enforcement Activity
From a practical standpoint, we are observing heightened activity from SARS in terms of reviews and audits. This trend is expected to continue, increasing tax exposure and audit risks, particularly for corporate entities and high-net-worth individuals.
3. Personal Income Tax: Limited Adjustments
It is unlikely that we will see meaningful inflationary adjustments to personal income tax brackets. As a result, “Bracket Creep”—where taxpayers are pushed into higher tax brackets due to inflation—will likely persist.
4. Sin Taxes
As in previous years, we anticipate the traditional increases in sin taxes on alcohol and tobacco products.
5. Taxation of Foreign Retirement Pensions
Treasury has indicated plans to revisit the taxation of foreign retirement pensions and annuities, and we may see further developments in this area.
6. Corporate Tax Rates
We do not expect any changes to the corporate tax rate, which is likely to remain at 27%.
7. Transfer Pricing and Global Tax Rules
SARS has made transfer pricing a priority, and we are seeing increased enforcement activity in this area.
Additionally, the practical implementation of the Global Minimum Tax Act and Administration Act, which address the OECD’s Global Anti-Base Erosion (GloBE) Rules, is underway. While SARS has extended registration and filing deadlines, these dates are fast approaching. We anticipate the Minister of Finance will confirm the final filing deadlines during the Budget Speech.
As we await the 2026 Budget Speech, taxpayers should prepare for continued focus on compliance and enforcement, particularly in areas like transfer pricing and global tax rules. Staying informed and proactive will be key to navigating the evolving tax landscape.
