Tax Tightening Ahead: Draft Tax Bills Aim to Plug Loopholes and Expand Revenue Net

Written By Eszter Rapanos

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National Treasury and SARS have just released the 2025 Draft Taxation Laws Amendment Bill (TLAB), the Tax Administration Laws Amendment Bill (TALAB), and key draft VAT regulations for public comment. This is part of the normal legislative cycle following the 2025 Budget, and the public now has until 12 September 2025 to weigh in.

The aim? To close loopholes, simplify compliance, and bring SA’s tax laws in line with international best practices and modern realities. But not all the changes are technical, some touch a nerve, especially for retirees with offshore nest eggs and importers of low-value goods.

What’s on the Table?

Here are the main technical proposals in simple terms:

  • Taxing Foreign Retirement Payouts

    South African residents will no longer be able to receive foreign pensions or lump sums tax-free. If passed, the change will apply from 1 March 2026. The following reasons were provided to remove this exemption:

    • It creates double non-taxation as the retirement income isn’t taxed in SA or abroad.

    • It conflicts with SA’s residency-based tax system, which aims to tax global income.

    • It unfairly benefits offshore savers over local ones, who do pay tax on withdrawals.

    • Even where SA has the right to tax under a treaty, the exemption eliminates that option.

  • Ring-Fencing Losses

    Tougher limits are proposed on using business losses to reduce tax unfairly, especially from side gigs.

  • Hybrid Instruments

    If it’s classified as debt under accounting rules, it’s also a debt for tax ending blocking attempts to exploit differing classifications for tax benefits.

  • CIS Loopholes Closed

    Collective Investment Schemes (such as unit trusts) will no longer be able to delay paying tax by using corporate reorganisation rules when swapping assets via company reorganisation rules. Treasury sees this as a loophole, not a legitimate incentive.

  • VAT on Small Imports

    The current VAT exemption for low-value imported goods will be scrapped, meaning all imported good, regardless of value will now attract VAT to level the playing field for local businesses. This proposal is a direct response to concerns about the loss of revenue from growing e-commerce purchases. It does also mean that purchasing goods online will cost an an average consumer more.

  • Airtime VAT Clarity

    When airtime bought in South Africa is used in another country, only the local distribution component will be subject to VAT, not the foreign service.

  • Carbon Tax Phase 2

    Companies that exceed their carbon budgets will face steeper tax penalties, while those who reduce emissions or improve efficiency will gain extended incentives and allowances. This aligns with new regulations from the Department of Forestry, Fisheries and Environment, pushing industries toward compliance with climate goals.

  • Understatement Penalties to be Limited to Substantial Understatements

    Another important technical change in the draft bill relates to understatement penalties. Currently, taxpayers may request a remission of penalties on the basis that the error was a “bona fide inadvertent error.” However, under the proposed amendment, this defence will now be explicitly limited to cases of “substantial understatement” only. This means the grounds for avoiding penalties are narrowing, small or less significant errors will no longer qualify for leniency under this provision. The change aims to provide greater clarity and reduce ambiguity around when SARS can apply or waive understatement penalties.

Final Word: Time to Speak Up

Public comments are open until 12 September 2025. If these proposals affect your business, retirement planning, or tax strategy, it’s time to engage. CIBA will prepare proposals on the Bill, so let us know what you think.

📧 Send your comments to: technical@myciba.org before 31 August 2025.

These bills could become law, make sure your voice is heard before then.

You can read the draft documents on National Treasury’s website here:

Eszter Rapanos
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