Business
New VAT Rules Could Push South Africa’s Private School Fees Even Higher
A major change to South Africa’s tax laws is heading for private schools, and many families may end up paying the price.
What’s changing and why it matters
Under the draft 2025 tax legislation, all private schools across South Africa that currently register for VAT will be required to deregister. That includes schools that reclaimed VAT on expenses such as facility upkeep, hall rentals, tuck shops, accommodation, uniforms, and more. The proposed law aims to close a loophole in existing regulations and clarify that any supply from basic education institutions should be VAT-exempt rather than taxable.
In practice, this means schools will lose the benefit of claiming back VAT on their costs and must repay past VAT claims. The start date initially planned for January 2026 has now been pushed back to 1 January 2027 following pressure from stakeholders.
The government argues the shift aligns taxation with the intention to exempt education from VAT. Unfortunately for many schools and families, the financial consequences may not be so straightforward.
Why this could mean higher fees and fewer scholarships
Private school associations and school leaders warn that this reform could seriously unsettle school budgets. Some schools acquired assets, including buildings and sports fields, with the assumption that VAT could be reclaimed. Now they face what is known as an exit VAT charge, treating their assets as though they were sold at the point of deregistration.
For schools that have invested heavily over the years, this could mean repaying millions of rand. Since many operate on a not-for-profit basis, that burden may land squarely on parents. Cost increases could lead to higher tuition or levies and reductions in scholarship offerings and community outreach programmes.
As sector representatives note, many independent schools provide vital alternatives in underserved communities, including areas where public education infrastructure remains lacking. The removal of VAT benefits threatens not only the schools themselves but also access to this education for many families.
Behind the scenes, reactions and possible relief
The proposed change has sparked outcry from the Independent Schools Association of Southern Africa and others in the education community, who argue the measure is regressive. Critics say the reform overlooks bigger questions: why are schools treated differently from universities and colleges when it comes to VAT?
After formal submissions and pushback, the government agreed to delay the effective date to 2027. Meanwhile, the National Treasury and South African Revenue Service say they are open to further engagement with schools that may struggle with deregistration or past VAT claims. There is also talk of broader relief or amnesty for some historic VAT claims, but nothing has been confirmed.
Until then, schools must plan for a significant financial shake-up, and parents must brace for possible fee hikes.
What this means for families
In a country already grappling with rising costs, interest rates, and a tight squeeze on household budgets, the reform may feel like another blow. For families paying school fees, the prospect of hikes or reductions in aftercare services or scholarships is very real.
For some parents, especially those outside elite income brackets, private schooling was already a stretch. This change could push once affordable schooling out of reach. For schools, the choice may be stark: absorb costs and risk financial instability, or pass them on to families.
At its core, the VAT reform raises urgent questions about the affordability, accessibility, and long-term sustainability of private education in South Africa.
Also read: Takealot’s ‘Get It Now’ brings instant delivery to Joburg and beyond
Follow Joburg ETC on Facebook, Twitter, TikT
For more News in Johannesburg, visit joburgetc.com
Source: Business Tech
Featured Image: MSN
