South Africa’s finance ministry announced on Thursday that it will not proceed with the planned increase in value-added tax (VAT) from May 1, following political opposition and investor concerns over potential instability in the coalition government, as claimed by Reuters.

As part of the national budget for 2025, the National Treasury recommended a gradual 1 percent point rise in VAT over two years. However, the two major coalition partners, the African National Congress (ANC) and the Democratic Alliance (DA), were unable to agree on the initial 0.5 percent point raise.

As a result, the VAT rate would remain at 15 percent, the ministry confirmed. Finance Minister Enoch Godongwana is scheduled to propose amended versions of the Appropriation and Division of Revenue Bills in the coming weeks, Reuters reported.