South Africa | Decrease in the Official Rate of Interest Effective February 2025
The official rate of interest, used to calculate the fringe benefit for low-interest or interest-free debt, is defined in section 1 of the Income Tax Act as the repurchase (repo) rate plus 100 basis points (1%). A new official rate takes effect from the first day of the month following the change in the repo rate.
On 31 January 2025, the repo rate decreased from 7.75% to 7.50%. As of February 2025, the fringe benefit for low-interest or interest-free debt must be calculated using the new official rate of interest, which will be:
- 7.50% + 1% = 8.50%.