SARS lowers official interest rate for fringe benefits on employer loans from 8.50% to 8.25%, effective 1 June 2025.
The South African Revenue Service (SARS) has announced a reduction in the official interest rate used to calculate fringe benefits on interest-free or low-interest loans, lowering it from 8.50% to 8.25%, effective 1 June 2025.
The revised rate is published in SARS’s updated Table 3 and aligns with ongoing efforts to reflect monetary policy changes in tax-related interest rate determinations.
This change affects how taxable benefits are calculated when employees receive loans from employers or related parties at interest rates below the official threshold.
Under South African tax rules, when an employee receives a loan from an employer or a related entity at no interest or at a rate below the official interest rate, the difference between the actual interest paid and what would have been paid at the official rate is treated as a taxable fringe benefit. This amount is then included in the employee’s taxable income.
Earlier, the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) decided to reduce the repo rate by 25 basis points, effective 30 May 2025.
