Finance Minister Enoch Godongwana has expanded the list of VAT-free essential food items in his 2025 Budget Speech, providing some relief to lower- and middle-income households facing rising costs of living.
Alongside this, he confirmed the long-debated VAT increase, announced updates to social grant allocations, and reaffirmed the freeze on fuel levy hikes.
What Godongwana said about zero-rated goods
During his address, Godongwana acknowledged the financial strain on South Africans due to escalating food and fuel prices. In response, the government has expanded the basket of zero-rated goods to include:
- Canned vegetables
- Dairy liquid blends
- Organ meats from sheep, poultry, and other animals
These additions mean that these items will now be exempt from the standard VAT, making them more affordable for consumers.
This expansion builds on the existing list, which includes staple goods like bread, maize meal, rice, and fresh fruit and vegetables.
The minister framed this as a targeted intervention aimed at reducing the burden on struggling households, stating:
“This decision is part of our broader effort to mitigate food insecurity and ensure that essential nutrition remains accessible.”
Final determination on VAT, social grants, and fuel levies
Despite fierce opposition from various political factions, the government confirmed that VAT will increase by 0.5 percentage points in 2025/26, with an additional 0.5% increase in 2026/27, bringing the rate to 16% by 2027.
Social grants will increase above inflation, with the R350 Social Relief of Distress (SRD) grant extended until March 2026 while discussions continue about its permanent implementation.
Other grant increases include:
- Old Age Pension: Increased by R100
- Child Support Grant: Increased by R50
- Disability Grant: Increased by R100
Meanwhile, the general fuel levy and Road Accident Fund (RAF) levy will remain unchanged, offering some relief to motorists for the second consecutive year.
Godongwana said this freeze, which saves South Africans approximately R4 billion, is meant to ease transportation costs in an already challenging economic climate.
The full list of zero-rated goods in South Africa (2025 update)
As of 2025, the following items remain VAT-free in South Africa:
- Brown bread
- Maize meal
- Rice
- Dried beans
- Lentils
- Pilchards in tins
- Milk powder
- Fresh fruit and vegetables
- Vegetable oil
- Eggs
- Samp
- Edible legumes
- Canned vegetables (NEW)
- Dairy liquid blends (NEW)
- Organ meats (NEW)
