Good news about banking fees and DStv prices

South African Revenue Service (Sars) commissioner Edward Kieswetter has announced that South African businesses and service providers that cannot immediately reverse the 0.5 percentage point VAT increase have until 15 May to do so.

Several businesses, including FNB, Nedbank, Standard Bank, Absa, and MultiChoice, told the Sunday Times they are confident they’ll make the changes on time.

Absa noted that affected customers will be reimbursed in cases where its systems are not adjusted in time.

DStv owner, MultiChoice, said the pay-TV service would no longer be implementing the increase.

The decision to withdraw the VAT increase, which would have taken effect on 1 May 2025, came after many businesses, including insurers, telecoms players, and banks, informed their customers of impending price increases.

These organisations must now readjust their billing systems back to 15% VAT.

On Friday, 25 April 2025, Kieswetter acknowledged that the reversal had significant implications for VAT vendors and consumers.

While he urged businesses to use the short time before 1 May to readjust their systems and report their progress to Sars, he gave companies that can’t make the changes immediately a three-week window to do so.

This sets the final deadline at 15 May.

“Should a vendor not be able to revert to the 15% rate, such supplies and purchases must be reported and accounted for at the 15.5% rate until such time that you are able to make the necessary system adjustments, which should be completed by no later than 15 May,” the commissioner said.

Businesses that cannot immediately revert must also report refunds provided to customers to Sars when filing their VAT returns.

“The VAT return declarations made will then be taken into consideration when verifications and/or audits on affected VAT tax periods are conducted. Sars will do its best to provide further clarity for vendors,” Kieswetter said.

VAT reversal welcomed with concerns

The Consumer Goods Council of South Africa (CGCSA) has warned that the decision to reverse the 0.5 percentage point VAT increase will come at a significant cost to retailers in the country.

CEO Zinhle Tyikwe said the CGCSA welcomed the reversal, with caution. She said it would go a long way toward relieving the financial burden on poor households in the country.

However, it has come at a cost for retailers.

She explained that retailers had been working to apply the VAT increase by 1 May by ensuring systems compliance, adjusting shelf price labelling for products, and notifying customers.

Tyikwe said this preparation came at significant costs, which are now being exaggerated as businesses move to reverse these efforts.

“The back and forth over the VAT issue came at a cost to retailers who have had to incur financial expenses while adjusting their systems,” she said.

“We’re yet to quantify the cost by retailers, but some have told us that it has been a significant expense both in terms of financial cost and hours spent to ensure they were compliant.”

On 24 April 2025, the Department of Finance announced that minister Enoch Godongwana would table in Parliament a proposal to maintain the VAT rate at 15% from 1 May.

However, this came with a warning.

“By not increasing VAT, estimated revenue will fall short by around R75 billion over the medium-term,” the Ministry of Finance said.

“The decision to forgo the increase follows extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees.”

Godongwana said he wrote to the Speaker of the National Assembly to notify Parliament of his intention to withdraw the Appropriation Bill and the Division of Revenue Bill.

“Parliament will be requested to adjust expenditure in a manner that ensures that the loss of revenue does not harm South Africa’s fiscal sustainability,” he said.

“The decision not to increase VAT means that the measures to cushion lower-income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited.”