High Court halts South Africa’s planned VAT increase

The Western Cape High Court delivered a major blow to the government’s tax plans by suspending South Africa’s scheduled VAT increase just days before it was set to take effect.

The Court blocked the proposed half-percentage-point rise, which was due to start on 1 May 2025, along with a second hike planned for April 2026, until proper legislation governing VAT rates is passed.

In addition, the Court overturned the resolutions passed by the National Assembly and the National Council of Provinces, which had endorsed the Standing Committee on Finance’s 2025 Fiscal Framework report. The ruling offers a wave of relief to consumers and businesses nationwide.

DA opposed the VAT hike

The case was brought by the Democratic Alliance (DA), which – despite being a member of the Government of National Unity (GNU) – consistently opposed the VAT hike throughout the parliamentary process.

The VAT increase had originally been announced during the 2025/26 National Budget in March, amid fierce public and political resistance.

Facing mounting pressure, Finance Minister Enoch Godongwana announced earlier this week that the government would rescind the planned increase, retaining the VAT rate at 15%.

Although a Bill to maintain the VAT rate at 15% has been tabled, there were concerns that parliamentary approval would not be achieved in time before the scheduled 1 May implementation date.

The High Court’s decision has now provided clarity and legal certainty, ensuring that no increase will proceed without full legislative oversight.

Meanwhile, the court further ordered that the Finance Minister and parliamentary leaders must pay legal costs, citing errors in the adoption of the fiscal framework.

The DA welcomed the ruling, stating: “We are pleased that the Minister of Finance eventually came back to the table and agreed to suspend the VAT increase in a lawful manner.

“This shows that government decisions cannot be made without proper oversight.

“It also gives South Africans certainty that changes affecting their pockets will not happen without the necessary checks and balances in place.”

The judgment is seen as a major affirmation of parliamentary accountability and public participation in economic policymaking at a time when South Africans are already under significant financial strain.