Rising corporate profits, particularly from the precious metals miners, higher revenue from the fuel levy and from VAT receipts have allowed the government to revise its revenue outlook upward.
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Rising corporate profits, particularly from the precious metals miners, higher revenue from the fuel levy and from VAT receipts have allowed the government to revise its revenue outlook upward by R21.3 billion from its previous estimates last year, despite low economic growth.
National Treasury said the government has received more VAT than it previously expected, corporate income tax and dividends collections have improved in the in-year outlook, while personal income tax and specific excise collections are expected to fall short of the government's Budget 2025 projections.
For instance, personal income tax revenue of R786,21bn is expected to be 7,7% lower than the estimate at the last Budget, while corporate income tax of R346,58bn is expected to be 8,7% higher than the estimate a year ago.
National Treasury says personal income tax fell due to low growth in private sector wages. Corporate income tax growth, however, was broad-based, although it declined in the manufacturing sector.
"Corporate profitability improved steadily during 2025, with December 2025 mining collections up 29% on December 2024 owing to high platinum group metals and gold prices," the Budget Review notes.
However, while near-term benefits of the precious metal upswing are positive for the revenue outlook, the gains are expected to be lower than in the previous period of high commodity prices between 2020/21 and 2022/23, as the current high prices are for a narrower set of commodities.
For example, coal and iron ore saw large price increases during the previous commodities boom, which contributed to higher revenue, but these prices have remained relatively flat this time round.
A 5% levy has been proposed on unpolished rough diamond exports, with stakeholder consultation to continue after the Budget on the structure of the levy.
Dividends collections were boosted by large one-off collections from the mining and retail sectors, and a recovery in corporate profits, National Treasury says.
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The VAT revenue estimate at R497,59bn is 8,7% higher than the initial forecast by National Treasury last year. Net VAT collections were revised upward from the last Budget due to "resilient household consumption expenditure," which benefited domestic VAT collections, and lower VAT refunds. This was offset by a weaker outlook for import VAT, due to lower than expected nominal import growth.
Tax revenue from the fuel levy is expected to increase by 13,3% to R97,3 billion. This is being driven by strong collections from fuel importers and follows a sharp drop in demand the previous year, which had reflected reduced diesel usage as a result of improved electricity supply.
Some specific excise duties are also expected to be below budget estimates because cigarette and petroleum products receipts contracted over the first 10 months of 2025/26 relative to the same period a year before.
On other tax revenue streams to government, National Treasury said receipts from taxes on international trade and transactions are expected to be 4,8% lower at R83,65bn. Customs excise duties revenue is expected to fall by 5% to R80,52bn. Notably, export tax is expected to be 20.1% lower at R373 million. Mineral and petroleum royalties are expected to be 11% higher at R11.8bn Payments to the SA Customs Union are projected to decline by 18.2% to R73.55bn.
Overall, the main budget revenue for the 2025/26 year is expected to increase by 9,3% to R1.98 trillion.
However, the medium-term revenue outlook has been revised lower by R57,2 billion relative to the 2025 MTBPS, primarily due to the withdrawal of the proposed tax increases.
"In combination, the improved outlook for corporate income tax, personal income tax and fuel levies will far outweigh the weaker net VAT and customs duties collections relative to the 2025 MTBPS," National Treasury said.
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