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On 21 February 2018, Finance Minister Malusi Gigaba delivered the maiden budget speech. Following President Ramaphosa’s State of the Nation Address theme of hope and renewal, Gigaba placed key emphasis on the risks that have been a centre of concern for the South African economy. These are the tax proposals as noted in the 2018 budget speech: Value-added Tax VAT has increased from 14% to 15% and will take effect from 1 April 2018. This increase will affect 80% of higher income earners. Zero-rating food, such as brown bread, will remain VAT-free. Personal Income Tax The personal income tax of those earning between R0 – R555 600 per annum will remain unchanged, while those who earn more than R555 601 per annum will be affected by a 3.1% increase. Primary, secondary and tertiary rebates are partially increased for inflation. Estate Duty and Donations Tax Estate Duty rates have increased by 5% on dutiable estates in excess of R30 million. The same percentage increase is applicable on donations of more than R30 million. |
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Was |
Now |
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Estate Duty above R30 million |
20% |
25% |
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Donations above R30 million |
20% |
25% |
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Sin Tax
2018 Sin Tax will increase by 6 – 10%. Tobacco will increase by 8.5%. The below infographic details the increase: |
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Excise Duty Due to take effect as of 1 April 2018, the maximum ad valorem excise duty for motor vehicles and luxury goods will increase from 7% to 9%. Fuel and Road Accident Fund Levy On 4 April 2018, the General Fuel Levy will increase by 22 cents per litre, and the Road Accident Fund Levy will increase by 30 cents per litre. Social Grants Lower income households will be financially relieved through an increase in social grants. The grant increases, which will be effective as of 1 April 2018, are as follows: |
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Increase |
Total amount |
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Disability Grant |
R90 |
R1690 |
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Care Dependency Grant |
R90 |
R1690 |
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Child Support Grant |
R20 |
R400 |
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Old Age Grant |
R90 |
R1690 |
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On 1 October 2018, these grants will increase by a further R10, taking the disability, care dependency and old age grants to R1 700, and the child support grant to R410. Environmental Taxes The Department of Environmental Affairs is due to publish a policy regarding the scope of environmental reform. Levy on plastic bags, vehicle emissions tax and the levy on light bulbs will be raised to promote eco-friendly choices. Corporate Income Tax and Dividends Tax Rates These have remained at 20%. General Points:
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