Experts divided over poultry industry's call for VAT-free chicken

The South African Poultry Association’s (SAPA) renewed call for chicken to be zero-rated for VAT has drawn mixed reactions from economists and industry analysts, as pressure mounts to ease the burden of rising food prices on low-income households.

SAPA confirmed that it has formally submitted a proposal to the National Treasury, requesting the removal of the 15% value-added tax (VAT) on chicken in the 2026 National Budget in February.

CEO of SAPA’s Broiler Organisation, Izaak Breitenbach, said on Wednesday that the proposal follows Treasury’s call for submissions after a parliamentary committee last year recommended expanding the list of VAT-exempt basic foodstuffs.

"At present, tinned pilchards are the only meat protein zero-rated for VAT, with the remaining proteins on the list limited to plant-based or dairy options," he said.

"These alternatives cannot sufficiently meet the daily protein and micronutrient requirements needed for healthy growth and development, particularly in children." 

Breitenbach argued that chicken is the most affordable and widely consumed animal protein in South Africa, particularly in low-income households, and that zero-rating it would ease household food pressure.

Citing economic data in SAPA’s submission, he said the average monthly cost of a basic household food basket is R5 440.60, while the national minimum wage provides a maximum income of R5 297.36. 

"After essential expenses such as electricity and transport, households fall 38% short of what is required for a basic nutritious diet," he said.

Breitenbach said removing VAT would narrow the income-to-food gap, reduce hunger, and make state feeding schemes, including the National School Nutrition Programme, more cost-effective.

He added that chicken provides high-quality protein and essential micronutrients that support child growth, maternal health and help prevent iron-deficiency anaemia.

Mervyn Abrahams, director at Pietermaritzburg Economic Justice and Dignity Group (PMBEJD), said the organisation supports SAPA’s call, adding that meat is an important source of protein but red meat prices are quite unaffordable for many families.

“That is why chicken plays an important role when it comes to nutritional value and we are also of the view that removing VAT on chicken would definitely make a difference and that is why we support such a call,” he said.

Abrahams said PMBEJD has consistently called for VAT exemptions on a broader basket of essential foods, including vegetables and proteins, to help households stretch limited incomes.

"When considering that in middle and low-income families there tends to be more than four people to feed, such a move would bring great relief." 

However, analysts caution that the cost to the fiscus could be substantial.

Anthony Clark from Smalltalkdaily Research said SAPA has been lobbying for VAT-free chicken for seven to 10 years, but the financial implications remain prohibitive.

"Chicken is eaten by the masses and the poor and it would benefit them. The problem If you remove 15% VAT on varying parts of chicken, it costs the Treasury billions and billions a year," Clark said.

"And that's the issue. When other products, which can also benefit the consumer, will attract much less cost to the Treasury by being VAT-exempt, there has to be a weighing of what will be more beneficial." 

Clark added that enforcing VAT exemptions on selected chicken cuts would also be difficult.

"If it's only certain parts of a chicken, as certain industry members said, what's to stop people importing whole chickens and chopping them up to then get VAT exemption? So it's very difficult to actually police. So you either have to exempt everything or you have to exempt nothing," he said.

Black Sash’s KwaZulu-Natal regional manager, Evashnee Naidu, welcomed SAPA’s proposal, saying escalating chicken prices have eroded access to an essential source of protein.

"Chicken used to be one of the most affordable sources of protein in this country, but due to various factors has significantly increased the cost, making it out of reach of many households," Naidu said.

"Removing VAT on chicken would go a long way to ensuring food security among poorer households and allowing consumers the option of a significant source of protein to assist with good nutrition."

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