South African President signed Taxation Laws Amendment Act 5 of 2026, introducing wide-ranging reforms across income tax, VAT, carbon tax and corporate rules, including retirement “Two-Pot System” clarifications, extended tax incentives, revised VAT exemptions, updated carbon tax rates and enhanced compliance and OECD-aligned provisions.
South African President has signed the Taxation Laws Amendment Act 5 of 2026, amending the Carbon Tax Act, 2019 and related Schedules. The Act was passed on 31 March 2026 and published in the Government Gazette on 1 April 2026. It introduces amendments across key South African tax laws, including changes to definitions, tax incentives and compliance rules.
Income Tax Act, 1962
The Act advances retirement reform under the “Two-Pot System” by clarifying the savings, vested and withdrawal components, and setting a minimum savings withdrawal benefit of ZAR 2,000, with limited exceptions. It introduces a definition of “FLAC instrument” and brings it into hybrid debt and interest limitation rules.
Tax incentives are extended, including Section 12L (energy efficiency savings) to 1 January 2031 and Section 13quat (Urban Development Zones) to 31 March 2030. For corporate tax, changes are made to Controlled Foreign Companies rules and shareholder tax refunds. The Section 11D R&D deduction is broadened by removing the requirement that research be carried on by the taxpayer. Section 8A on share option benefits is repealed.
VAT Act, 1991
The education exemption is refined to include registered public and private colleges under the Continuing Education and Training Act, 2006, with exclusions for certain welfare-related supplies. Insurance definitions are clarified to confirm that a premium must be paid, including subsidised payments. Airtime voucher rules are updated for services provided outside South Africa by non-residents. A new zero-rating applies to certain testing services for non-residents where tested goods lose commercial value.
Carbon Tax Act, 2019
Definitions are aligned with the Climate Change Act, 2024, including “carbon budget”. A new rate of R640/tCO2e applies to emissions exceeding approved carbon budgets. Refunds are allowed where compliance is achieved within a carbon-budgeting period, and the offsets allowance increases from 10% to 15% for fuel combustion activities.
Other amendments
The Global Minimum Tax Act, 2024 is updated to reflect OECD/G20 Pillar Two guidance up to June 2024. The Securities Transfer Tax Act, 2007 introduces an exemption for transfers to collective investment schemes. The Customs and Excise Act, 1964 continues prior Schedule amendments.
Effective dates
Two-Pot retirement changes largely apply from 1 September 2024. Most VAT and corporate tax changes take effect on 1 January or 1 March 2026. The Securities Transfer Tax exemption applies from 1 January 2027.
