South Africa | Official rate of interest increase effective June 2026

South Africa | Official rate of interest increase effective June 2026

The South African Reserve Bank has adjusted the repo rate, increasing the official rate of interest used to calculate the taxable fringe benefit on low-interest or interest-free loans, effective 1 June 2026.

What is changing
Official rate of interest
  • The repo rate has increased from 6.75% to 7.00%, effective 29 May 2026.
  • As a result, the official rate of interest has increased from 7.75% to 8.00%, effective 1 June 2026.
  • Under section 1 of the Income Tax Act, the official rate of interest is defined as:
    • the repo rate applicable plus 100 basis points (1%).
    • Where a new repurchase rate is determined, the new rate of interest applies from the first day of the month following the date on which the new rate came into operation. As the repo rate changed on 29 May 2026, the new official rate of interest applies from 1 June 2026.
  • Under paragraphs 2(f) and 11 of the Seventh Schedule to the Income Tax Act, where an employee owes money to their employer at a rate below the official rate of interest, the difference between the rate charged by the employer (if any) and the official rate of interest constitutes a taxable fringe benefit.

Official source

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