from DION HENRICK in Cape Town
Western Cape Bureau
CAPE TOWN, (CAJ News) – SOUTH Africa’s 2026 National Budget has delivered targeted relief for small and medium-sized enterprises (SMEs), combining regulatory reform with tax incentives designed to ease compliance burdens, unlock capital and simplify day-to-day operations for growing firms.
In his Budget Speech on Wednesday, Finance Minister Enoch Godongwana confirmed that the value-added tax (VAT) registration threshold will increase to R2.3 million.
The adjustment directly addresses a longstanding concern among smaller businesses: compliance costs have risen faster than turnover, particularly for firms on the cusp of mandatory VAT registration.
By lifting the threshold, government reduces the number of SMEs required to register, file returns and manage complex VAT accounting systems.
For many entrepreneurs, this translates into lower administrative costs, reduced reliance on external tax consultants and improved cash-flow flexibility.
Businesses below the new threshold can redirect resources previously spent on compliance into stock, staff, technology or market expansion.
Simone Cooper, Head of Business & Commercial Banking at Standard Bank South Africa, described the measure as immediate and practical relief.
“For many SMEs, compliance costs can be disproportionate to turnover. The increase in the VAT registration threshold to R2.3 million is a welcome and practical measure. This adjustment creates breathing room for entrepreneurs to reinvest in growth, strengthen resilience and focus on expansion rather than administration,” Cooper said.
The Budget also strengthens exit and succession planning incentives for small business owners.
The capital gains tax exemption on the sale of a qualifying small business by older persons will increase from R1.8 million to R2.7 million, while the qualifying business value cap rises from R10 million to R15 million.
These changes matter for two reasons. First, they reward entrepreneurship by allowing founders to retain more value when selling or transferring their businesses.
Second, they support generational transition, encouraging formalisation and continuity rather than abrupt closures.
By raising both the exemption and the asset cap, government broadens the pool of SMEs that can benefit, making it simpler for owners to plan structured exits without punitive tax consequences.
Beyond domestic relief, the Budget links SME growth to regional opportunity. Godongwana reaffirmed support for implementation of the African Continental Free Trade Area (AfCFTA) and signalled that National Treasury will ease certain cross-border capital flow restrictions.
For SMEs looking to expand into African markets, fewer capital constraints and improved trade systems reduce transaction friction and currency management complexity.
Six border post public-private partnership projects are among the most advanced trade facilitation initiatives, aimed at reducing congestion and cutting delays that inflate logistics costs.
Complementary rail and port reforms seek to dismantle export bottlenecks that disproportionately affect smaller exporters with limited warehousing capacity.
Cooper noted alignment between public policy and private-sector capability: “We have long supported clients operating across Africa in alignment with the AfCFTA. The Budget’s focus on regional integration, capital flow flexibility and improved trade infrastructure reinforces this trajectory. As Business & Commercial Banking, we are present in 15 markets across Africa, as well as in Jersey and the Isle of Man. We continue to support businesses expanding across borders through integrated trade, payments and working capital solutions.”
Infrastructure investment exceeding R1 trillion over the medium term, alongside energy transmission and water reforms, aims to remove structural constraints that raise operating costs for SMEs.
With government debt projected to stabilise and growth forecast at 1.6% for 2026, the Budget combines fiscal discipline with targeted enterprise support.
As Cooper concludes: “Targeted SME relief improves short-term viability, but sustained growth will depend on reliable infrastructure, efficient payments systems, strong trade corridors, and continued access to finance. While the 2026 Budget provides important building blocks, the focus now shifts to implementation.”
– CAJ News