The 2026 National Budget marks a decisive shift from crisis containment to fiscal consolidation, with meaningful implications for South African businesses operating in a constrained growth environment, says Etienne Raubenheimer, Executive Head of CFO services at Outsourced CFO (OCFO), a global financial consulting and accounting firm headquartered in Cape Town.
Following Wednesday’s budget speech delivered by Minister of Finance Enoch Godongwana to Parliament, Raubenheimer highlights several key points that will affect businesses in South Africa.
“The most immediate impact for small and medium-sized enterprises is the increase in the compulsory VAT registration threshold from R1 million to R2.3 million”, says Raubenheimer. “For many growing businesses, VAT registration brings administrative complexity, additional compliance costs and tighter cash flow management. Raising the threshold reduces this burden and allows smaller operators to scale before entering the VAT net.”
Raubenheimer points out that this adjustment is significant. “Increasing the VAT threshold recognises that the cost of doing business has risen materially over recent years. It gives smaller enterprises breathing room, improves cash flow flexibility and reduces compliance pressure at a critical stage of growth.”
Equally important is the decision to withdraw R20 billion in previously proposed tax increases following stronger-than-expected revenue performance. For business owners who were anticipating higher tax obligations, this provides welcome certainty and preserves working capital. The adjustment of personal income tax brackets and rebates fully in line with inflation will also support household disposable income, indirectly benefiting consumer-facing sectors.
The Budget also enhances exit and succession planning for entrepreneurs. The capital gains tax exemption for the sale of small businesses by older individuals increases from R1.8 million to R2.7 million, and the qualifying business value threshold rises to R15 million. This creates improved flexibility for founders planning retirement or ownership transitions.
“This change strengthens the long-term business ecosystem,” says Raubenheimer. “Entrepreneurs are more likely to formalise and grow their enterprises when exit options are tax efficient and predictable. It supports generational wealth creation and encourages investment into scalable ventures.”
However, cost pressures remain, he warns. Inflation-linked increases in fuel levies and excise duties will feed through supply chains, particularly in transport-intensive sectors such as logistics, agriculture and manufacturing. Businesses will need to factor these incremental increases into pricing strategies and margin management.
The broader macroeconomic picture offers cautious optimism, Raubenheimer adds. Gross debt is projected to stabilise at 78.9 percent of GDP before declining over the medium term, while the consolidated budget deficit continues to narrow. South Africa’s removal from the FATF grey list and its recent credit rating upgrade reinforce the message of restored fiscal credibility .
For business, this credibility matters. It influences borrowing costs, investor appetite and currency stability. “When debt stabilises and the primary surplus strengthens, systemic risk reduces,” Raubenheimer explains. “That improves the environment for capital raising, expansion funding and long-term planning. Stability is not headline-grabbing, but it is foundational.”
Infrastructure remains central to the growth strategy, with public-sector investment exceeding R1trillion over the medium term. Reforms in energy and logistics aim to unlock private participation and address bottlenecks that have constrained exports and increased operating costs. The growing pipeline of public-private partnership projects presents opportunities for businesses in construction, advisory, finance and technology.
At the same time, projected economic growth of 1.6 percent in 2026, rising to 2 percent by 2028, underscores that demand conditions will remain relatively modest. Growth will likely favour well-managed businesses with strong financial controls and strategic positioning.
“The 2026 Budget does not promise rapid expansion, but it does reduce fiscal uncertainty, ease compliance pressure on smaller firms and reinforce structural reform momentum,” concludes Raubenheimer. “In a stabilising but competitive environment, businesses that prioritise financial discipline, governance and infrastructure-aligned opportunity will be best placed to benefit in the years ahead.”
Business owners who want clarity on how the 2026 Budget impacts their tax, cash flow and growth strategy can connect with the team at Outsourced CFO for tailored guidance. To find out more about the services offered by OCFO, or to contact the team, visit www.ocfo.com.
About the company: Outsourced CFO is a global financial advisory firm supporting more than 1300 organisations across over 25 industries. From its roots in South Africa, the company has expanded internationally and now boasts a presence in Cape Town, London, and New York. Outsourced CFO provides a complete suite of services including fractional CFO support, accounting, compliance, strategic financial guidance, and talent placement. By combining deep financial expertise with modern technology, the firm helps entrepreneurs and high-growth companies gain clarity, raise capital, and build sustainable businesses.
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