Potential changes to tax legislation may affect rules concerning donations, Value Added Tax (VAT), tax credits for medical programs, and tax refund processes from SARS.
The National Treasury and the South African Revenue Service (SARS) have published draft Tax Legislation Amendment Bill for 2026 (TLAB) and draft Tax Administration Legislation Amendment Bill (TALAB) for public comment. These drafts were released on July 30, 2026, and contain several tax and administrative proposals outlined in the 2026 budget. It is important to note that they are not yet law and are open for comments until August 28, 2026.
After the consultation period concludes, the National Treasury and SARS will consider the submitted comments before the final approval of the legislation and its submission to Parliament. According to Tax Consulting South Africa, the goal of these amendments is to strengthen tax administration, eliminate loopholes in taxation, and make technical adjustments to existing tax legislation.
The accompanying memorandum details the proposed changes affecting personal income tax, savings and employment, business, business incentives, financial institutions, international tax matters, Value Added Tax (VAT), and the Carbon Tax Act.
Key Proposed Tax Changes
Donation Tax
The draft legislation provides for a restriction on the exemption of donations between spouses if the receiving spouse is not a South African tax resident. This measure aims to prevent the use of changes in tax residency to evade donation tax and capital gains tax.
Special Economic Zones
New transfer pricing rules are proposed for certain transactions between companies operating in Special Economic Zones (SEZs) and related entities outside these zones.
Medical Program Tax Credits
The draft bills propose expanding the right to receive a tax credit for members of certain limited medical programs by including a legal definition of such programs in the tax legislation.
Controlled Foreign Companies
The proposed amendments aim to unify currency transfer rules between Controlled Foreign Companies (CFCs) and Internal Asset Management Companies. If approved, these changes are expected to take effect on January 1, 2027.
VAT on Second-hand Goods
The draft legislation introduces additional documentation requirements for sellers dealing in second-hand goods. These measures are intended to reduce fraudulent VAT claims while bringing tax requirements into compliance with the Second-hand Goods Act and its regulations.
SARS Refunds
The proposals will allow banks to verify certain tax refunds before or after payment to identify suspicious transactions and assist SARS investigations.
Tax Compliance Status
The draft Tax Administration Legislation Amendment Bill also seeks to address issues arising when taxpayers may not be recognized as tax compliant, while requests for payment suspension or penalty relief are still under review. The proposed changes remain subject to public comment until their consideration by Parliament.
