South Africa | Decrease in the Official Rate of Interest Effective September 2025

South Africa | Decrease in the Official Rate of Interest Effective September 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.
Effective 1 August 2025, the repo rate decreased from 7.25% to 7.00%. As of September 2025, the fringe benefit for low-interest or interest-free debt must be calculated using the new official rate of interest, which will be:
  1. 7.00% + 1% = 8.00%