| The Minister of Finance, Enoch Godongwana, delivered the 2026 Budget Speech today against a backdrop of improving fiscal credibility and a cautious economic recovery. Rather than introducing major tax shocks, government has focused on stabilising public finances, easing pressure on small businesses and accelerating infrastructure led growth. For businesses, the Budget signals a more predictable operating environment, with targeted SME relief, renewed investment in energy and logistics, and reforms aimed at lowering structural costs and supporting long-term growth. |
| Capital Gains Tax (CGT) relief for SMEs The CGT exemption on selling a small business increases from R1.8 million to R2.7 million, for owners aged 55 and older or selling due to ill health. The business value limit also rises from R10 million to R15 million, helping owners keep more after tax and supporting retirement and family succession planning. VAT Threshold increase – major relief for small businesses SMEs with a turnover of between R1m and R2.3m can deregister, freeing up time and lowering expenses. Thousands of small businesses will no longer be forced to register for VAT Lower admin burdens – fewer filings, audits and compliance requirements Improves cash flow, because businesses avoid: Adding VAT to prices (making them more competitive), and Paying SARS VAT regularly |
| A positive economic outlook shows that South Africa is projected to grow by 1.6% in 2026, rising to 2% by 2028. Logistical bottlenecks, weak infrastructure and disease outbreaks such as foot and mouth continue to affect productivity. Debt is stabilising for the first time in 17 years at 78.9% of GDP (2025/26), declining thereafter Budget deficit is narrowing to 4% in 2026/27 and 3.1% by 2028 Primary surplus strengthening – signalling more sustainable public finances |
| Payments Ecosystem Modernisation (PEM) The rollout of PEM, including the launch of PayInc as shared digital payments infrastructure, strengthens compatibility and integration across the financial system. For fintechs and financial service providers, this enables easier integration, supports faster innovation in digital payments and is expected to lower transaction costs over time – improving efficiency, competition and customer experience. |
| Rising operating costs for SMEs Fuel levies, carbon, RAF levies and excise duties have all increased in line with inflation, adding pressure to small and medium businesses. SMEs in transport, logistics, delivery services, agriculture, taxis and manufacturing are likely to see higher operating costs, with knock‑on effects for food prices, raw materials, and distribution and courier services. To protect margins, many businesses may need to adjust pricing or optimise routes and operations. Infrastructure Investment & Public‑Private Partnerships (PPPs) Government is accelerating infrastructure investment and expanding PPPs, creating new opportunities for small and medium enterprises. SMEs can benefit through increased subcontracting across construction, maintenance, ICT, energy and logistics. Faster infrastructure upgrades are expected to improve delivery times, energy reliability and market access – supporting growth for franchisees and owner‑operated farms structured as formal business entities. |
| Overall, the 2026 Budget sends a clear signal of stability and support for business. With public debt stabilising, broad tax increases withdrawn and targeted relief introduced for small and medium enterprises, government is prioritising certainty over disruption. At the same time, significant investment in infrastructure, energy, logistics and payments modernisation aims to reduce structural constraints, improve reliability and create new opportunities for growth. While some operating costs will rise in line with inflation, the policy direction is firmly pro-reform and pro investment, providing businesses with a more predictable environment in which to plan, invest and expand. |
