South Africa’s 2026 Budget, delivered by Finance Minister Enoch Godongwana, focuses on stabilising debt, supporting inclusive growth, funding key social services, and easing pressure on small businesses, while raising sin taxes on tobacco, alcohol, and fuel from April 2026.
South Africa’s Minister of Finance, Enoch Godongwana, delivered the 2026 Budget Speech on 25 February 2026, setting out the government’s fiscal priorities and economic direction for the year ahead.
The Budget focuses on stabilising public debt and promoting inclusive economic growth through disciplined expenditure and structural reforms, particularly in the energy and logistics sectors. It confirms continued funding for core social services such as education, healthcare, and social grants, alongside a strong emphasis on infrastructure investment to support long-term growth.
The speech also outlines tax adjustments aimed at easing pressure on households and small businesses, while highlighting the economic damage caused by illicit trade. Overall, the Budget presents a comprehensive fiscal roadmap intended to restore credibility to public finances and strengthen the country’s economic sovereignty.
Business and corporate measures
The Budget introduces several measures to support business activity, encourage investment, and provide targeted relief to small enterprises.
Tax relief and revenue measures
- Withdrawal of proposed tax increases: Stronger-than-expected revenue collections, including corporate income tax, have allowed the government to withdraw the ZAR 20 billion in tax increases that were provisionally announced in the May 2025 Budget.
- Support for small businesses:
- The compulsory VAT registration threshold will increase from ZAR 1 million to ZAR 2.3 million, helping small businesses manage rising operating costs.
- The capital gains tax exemption for older persons selling a small business will rise from ZAR 1.8 million to ZAR 2.7 million. This exemption will now apply to businesses valued at up to ZAR 15 million, compared with the previous ZAR 10 million limit.
- Corporate income tax performance: Corporate income tax receipts exceeded expectations in the 2025 Budget, contributing to an improved fiscal outlook during the year.
Structural and regulatory reforms
- Energy and logistics: Regulatory reforms in the energy sector are intended to unlock private investment in electricity generation. In logistics, the government plans to expand public-private investment in rail operations while retaining state ownership of the infrastructure.
- Public-private partnerships (PPPs): PPP regulations have been amended to simplify procedures and clarify institutional responsibilities. Separate PPP regulations for municipalities are expected to be finalised by 30 June 2026.
- Skills development: The government is considering reforms to the national skills development framework, including possible changes to the skills development levy paid by employers, after acknowledging that current outcomes have fallen short of expectations.
Sector-specific issues
- Illicit trade: Illicit trade continues to pose a significant risk to the corporate sector. The Budget cites the closure of local operations by a major tobacco producer as a clear example of the impact on employment and economic activity.
- Data infrastructure: To support the expansion of the digital economy, the government is examining measures to encourage further investment in data centres across the country.
Sin taxes
Consumers can expect to pay more for tobacco, alcohol, and petrol from 1 April 2026.
“Increases to certain taxes are unavoidable. For 2026/27, excise duties on tobacco will be increased in line with inflation. This includes excise duty on electronic nicotine and non-nicotine delivery systems.
As a result:
• The tax on a 20-pack of cigarettes rises from ZAR 22.81 to ZAR 23.58.
• Pipe tobacco rises by 28 cents per 25 grams, and cigarette tobacco by 87 cents per 50 grams.
• Cigars rise by R4.56 per 23 grams.
The excise on alcoholic beverages also rises by inflation.
As such:
• A 340 millilitre can of beer or cider increases by eight cents.
• A 750 millilitre bottle of wine goes up by 15 cents.
• A 750 millilitre bottle of spirits will increase by ZAR 3.20.
In terms of fuel levies, the total increase will also be in line with inflation.
• The general fuel levy will go up by nine cents per litre for petrol and eight cents per litre for diesel.
• The carbon fuel levy will go up by five cents per litre for petrol and six cents for diesel.
• The Road Accident Fund levy will increase by seven cents per litre.
