South Africa | Decrease in the Official Rate of Interest Effective December 2025
The South African Reserve Bank (SARB) has published an update to the repo rate, which impacts the official rate of interest used for calculating the taxable benefit on low-interest or interest-free loans.
The new rate is effective from 1 December 2025.
Legislative summary of changes
- According to paragraphs 2(f) and 11 of the Seventh Schedule to the Income Tax Act, when an employee owes money to their employer at a rate lower than the official rate of interest, the difference between the employer’s rate (if any) and the official rate of interest is treated as a taxable fringe benefit.
- The official rate of interest is defined as the South African repurchase rate (repo rate) plus 100 basis points (1%).
- Following the repo rate decrease from 7.00% to 6.75% on 21 November 2025, the official rate of interest has been adjusted from 8.00% to 7.75%, effective 1 December 2025.
Additional information and resources: