South Africa’s Revenue Service increased the official interest rate used to calculate taxable fringe benefits on interest-free or low-interest loans from 8.00% to 8.25%, effective 1 October 2026.
The South African Revenue Service (SARS) has updated its Table 3, reducing the official interest rate used to tax interest-free or low-interest loans from 8.00% to 8.25%, effective 1 December 2025, with effect from 1 October 2026.
The rate is applied to calculate interest and penalties on late tax payments.
Under the Income Tax Act, a taxable fringe benefit arises when an employee owes a debt to their employer—or to a related entity arranged by the employer—and pays interest below the official rate. The difference between the official rate and the interest actually paid is treated as a taxable benefit.
The interest rate increase followed the Reserve Bank’s Monetary Policy Committee decision on 23 September 2026 to raise the repo rate to 7.25%. The official interest rate was set one percentage point (1.0%) above the repo rate. The rate applicable to interest-free or low-interest loans had previously risen from 7.75% to 8.00%, effective 1 June 2026.
Earlier, SARS released updated interest rate tables on 20 July 2026.
