Court cracks down on VAT: Minister’s announcement not enough, lawmakers must act

Enoch Godongwan

Cape Town – The Western Cape High Court has ordered that the planned 0.5% VAT increase be suspended until Parliament passes a law formally reversing it.

This follows a legal challenge by the DA and EFF.

Although Finance Minister Enoch Godongwana had already announced the VAT hike reversal, the court ruled that his announcement alone was not enough — legislation must be passed.

“The Minister of Finance’s announcement on 12 March 2025 made under section 7(4) of the Value-Added Tax Act 89 of 1991, whereby the Value-Added Tax (VAT) rate was adjusted as follows “the first 0.5 percentage point increase in the VAT rate will take effect on 1 May 2025 and the second 0.5 percentage point increase will take effect on 1 April 2026”, is suspended pending the passing of legislation regulating the VAT rate or the final determination of Part B whichever occurs first.”

The court also invalidated Parliament’s earlier approval of the 2025 Fiscal Framework and ordered Godongwana, National Assembly Speaker Thoko Didiza, and NCOP Chairperson Refilwe Mtshweni-Tsipane to pay half the legal costs, including those of two senior advocates.

“The resolutions of the National Assembly and the National Council of Provinces, adopted on 2 April 2025, to accept the report of the Standing Committee on Finance and the Select Committee on Finance, on the 2025 Fiscal Framework, are set aside.”

The DA and EFF argued in court filings that without a lawful fiscal framework, South Africa effectively has no valid budget.

The EFF further accused Parliament of unconstitutional processes and called for a complete reset of the 2025 budget.

The VAT hike, initially set for 1 May 2025, will now not proceed, and Treasury said it will consider other proposals for future budgets.

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