SA urged to adjust VAT gaps, amid political resistance (opens original article in a new tab)

South Africa's VAT-to-GDP ratio lags behind OECD countries due to structural issues, prompting calls for policy adjustments amid political resistance to VAT hikes.

• South Africa's VAT-to-GDP ratio is 6-7%, below the OECD average of 7-8% due to structural factors like tax exemptions and informality.
• The 2026 budget raised VAT registration thresholds to ease administrative burdens on small businesses, avoiding a VAT rate hike.
• Experts suggest reducing zero-rated items and improving compliance to address the VAT gap, but political resistance remains a challenge.