The South African Revenue Service (SARS) has increased the official rate of interest used to calculate the taxable value of interest-free and low-interest loans from 7.75% to 8.00%, effective 1 June 2026. The adjustment follows changes in the Reserve Bank’s repo rate and will affect the taxation of certain employee-related debt arrangements.
The South African Revenue Service (SARS) has published an updated version of its Interest Rates – Table 3, confirming that the official rate of interest for income tax purposes has increased from 7.75% to 8.00% with effect from 1 June 2026.
The official rate of interest is a key benchmark used in South Africa’s tax system to assess the value of taxable benefits arising from interest-free or low-interest loans provided by employers and related parties.
According to SARS, the rate is determined under section 1(1) of the Income Tax Act 58 of 1962 and is calculated as the South African Reserve Bank’s repurchase (repo) rate plus one percentage point.
Any change in the repo rate automatically feeds through to the official rate of interest, with the revised rate becoming effective on the first day of the month following the date on which the new repo rate comes into operation.
