First Reading debate: Taxation Laws Amendment Bill [B30– 2025] & Second Reading debate: Tax Administration Laws
Amendment Bill [B29– 2025]
13 January 2025
We consider the taxation laws amendment bill and the Tax Administration Laws Amendment Bill at the beginning of the year 2026. A year in which we celebrate 30 years since the adoption of our constitution in 1996. A constitution that has laid a firm foundation to build a South Africa that places the interests of all South Africans, with a commitment to address the injustices of the past. Through our progressive redistributive tax system, we have managed to collect revenue that has enabled the government to improve the living conditions of South Africans in rural and township locations.
Today, access to electricity is not a luxury; access to water has been expanded, many have decent housing, and we have a schooling system that has matured, producing learners who can take advantage of the opportunities created in our post-schooling system. Over 60 per cent of the national budget is on the social wage, addressing key drivers of poverty and creating developmental opportunities for all South Africans.
Taxation laws are important to raise revenue for the state, which is appropriated to different organs of the state to implement the imperatives of the Bill of Rights and what the Constitution requires from the state, the people, and the whole of society.
Tax policy is a critical instrument to support social and economic policy through various mechanisms, such as a tax, a tax exemption, and an incentive for investment and zero-rating of items among other measures.
All these mechanisms support the implementation of fiscal policy.
The bills before us further these aspirations. Focusing on supporting child support through enabling an exemption, the bill before us exempts the payment of child maintenance as an income to the recipient, as it contradicts the policy intention of alleviating the ability of guardians to support children. Child maintenance funded from after-tax income will be tax-neutral for the recipient. Our government has made commendable strides to continue to support children with a comprehensive approach, which also includes healthcare, child grants, and schooling.
To enhance the administration of schools, the taxation laws bill has made basic educational activities VAT-exempt. This is a result of concerns raised by schools due to the administrative burden. This decision will be implemented in January 2027 to enable discussions with stakeholders for a transition out of the VAT system.
The bill further includes a provision for the inclusion of an amount assigned to a non-retirement member spouse of a retirement fund in the circumstance of a dissolution of a marriage under religious tenets. This is to expand the various basis of a dissolution of a marriage within the tax system.
To support economic growth and development, the bill extends the Urban Development Zone tax incentive to a sunset date of March 2030. These tax incentives support inner city rejuvenation to increase private investment, allowing a 100% deduction over a 11-year period. This measure attracts investment in infrastructure, which will contribute to job creation.
Another important amendment in the bill is the additional deduction for the domestic production of battery electric and hydrogen-powered vehicles, which will contribute to increasing investment in the automotive sector. This contributes to the growth of the green economy by supporting value addition in the country. These amendments expand the definition of ‘motor vehicle manufacturer’ to include heavy vehicles and component manufacturers. This measure is part of the tax incentive for manufacturers of Battery Electric Vehicles and Hydrogen Powered Vehicles who claim a 150 per cent accelerated depreciation allowance on qualifying capital expenditure incurred in South Africa. This measure should support efforts to expand manufacturing and beneficiation from the source.
To support businesses that are involved in exports and imports and ensure they are globally competitive, goods of a value of R500 or less and books below R100 for customs duty purposes will be exempt from VAT. This should encourage South African businesses to target the e-commerce industry and increase production of low-cost products, which also creates opportunities for small businesses.
Another measure to support the productive sectors of the is the diesel refund system to provide full or partial relief for the General Fuel Levy (GFL) and the Road Accident Fund (RAF) levy to primary sectors. This has been amended to not be applicable at 80% but will be 100%. This measure enhances the support of various industrial sectors, which are critical for decent job creation. This will provide an additional relief of about R1 billion for taxpayers.
The African National Congress support the bills and urges the department to ensure that all incentives provided result in a demonstrable impact of creating jobs and increasing the industrialisation of the South African economy.