Illustrative image sources: Adobe Stock | Waldo Swiegers / Bloomberg / Getty Images Improved tax collection and non-tax revenue on the back of higher platinum group metal and gold prices resulted in the pull-back of the R20-billion tax that was floated last year (with no indication of where the additional R20-billion would come from) after the VAT increase was spiked.
“The R20-billion tax increase previously pencilled in for the 2026 Budget is withdrawn.” – Budget Review 2026
Reading further down, the Budget Review document explains that “high direct taxes erode disposable income and consumption expenditure and may incentivise stronger avoidance measures. Beyond a certain point, increases in tax rates may not generate additional revenue and are detrimental to economic growth. Ultimately, the best option to increase revenue is by broadening the tax base and growing the economy.”
This could easily have been verbatim from the lips of SARS commissioner Edward Kieswetter, who said much the same thing last year.
The expected outcome for tax and non-tax revenue for 2025/26 has been revised to R1.98-trillion, up from R1.95-trillion.
Tax revenue alone is up R28.8-billion, which is attributed to:
- Higher net VAT – as consumers spent more, net VAT collections went up;
- High platinum group metal and gold prices pushing up mining tax collections by 29% for December 2025 compared with December 2024;
- Dividends tax collection boosted by large one-off collections from the mining and retail sectors and a recovery in corporate profits.
Non-tax revenue is up by R3.2-billion for 2025/26 and R16.9-billion over the 2026 MTEF, largely due to increased mining royalties.
In the first three quarters of last year, SARS significantly reduced overdue scheduled payments, which declined from R14.6-billion to R6.8-billion.
The same period also saw 1.3 million new taxpayers registered across various tax categories, contributing net revenue of R4.9-billion, up slightly from the same period in the previous year. The tax authority also engaged with digital economy participants, particularly social influencers, to facilitate tax compliance in this emerging segment.
Tax debt collections
The 2025 Budget and 2025 Medium Term Budget Policy Statement estimated that SARS would collect between R20-billion and R50-billion in additional tax revenue by increasing the collection of tax debt from R95-billion to at least R120-billion in 2025/26. To support this effort, the government allocated an additional R7-billion to SARS over the medium-term expenditure framework period, part of which was used to recruit 1,500 additional debt collectors. SARS and National Treasury also implemented monthly reporting on debt collections to enhance transparency and track progress.
Total outstanding tax debt stood at R646-billion on 31 January 2026, of which R518.2-billion is undisputed. By that date SARS had collected R79.4-billion, falling R15-billion short of the target for the period, due in part to delayed onboarding of additional collection personnel, a rise in disputed debts and an increase in deferred payment arrangements.
Recent actions by SARS, including enhancing collaboration with banks and hiring additional legal professionals to pursue civil judgments, are expected to increase collections, but it is unlikely that the targets will be met. Consequently, the fiscal framework does not include additional revenue from debt collections.
Corporate income tax
In 2026/27, the government will implement the updated global minimum tax rules, which are expected to reduce profit shifting by multinational corporations by reducing opportunities to take advantage of negligible or zero tax rates in other countries.
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Using the most recent data on companies’ operations and taking into account the OECD’s updated rules following negotiations between member states, tax revenues of R2-billion are estimated as a result of this reform in 2026/27. This compares with the previous estimate of R8-billion.
Entrepreneurs will be pleased with the adjustments to the turnover tax regime for micro businesses as below:
Special economic zones
Qualifying companies located in special economic zones approved by the finance minister are taxed at a corporate tax rate of 15% instead of 27%. To prevent companies from shifting profits to connected firms in a special economic zone simply to take advantage of a lower tax rate, companies are disqualified if more than one-fifth of expenditure or gross income arises from transactions with connected firms outside the zone. These rigid rules work against businesses already operating in the zones, as well as against potential investors wanting to use the zones to strengthen their own supply chains.
The government proposes a different approach. It will assess whether companies are buying or selling their products to connected parties outside the zone at market-related prices to ensure that profits are not shifted into the low-tax zone. DM