Outsourced CFOs say Budget 2026 signals a shift towards fiscal sustainability and the pace of reform, creating a more predictable environment for South African businesses, while reinforcing the importance of fiscal discipline, strategic positioning and long-term growth planning in a constrained economic environment.
– The 2026 national budget marks a decisive shift from crisis containment to fiscal consolidation, which has meaningful implications for South African businesses operating in a limited growth environment, says Etienne Raubenheimer, acting head of CFO services. Outsourced CFO (OCFO), a global financial consulting and accounting firm headquartered in Cape Town.
Following Wednesday's budget speech in Parliament by Finance Minister Enoch Godongwana, Raubenheimer highlighted several key points that will impact businesses in South Africa.
“The most immediate impact for small and medium-sized enterprises is the increase in the mandatory 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 tight cash flow management. Raising the threshold reduces this burden and allows smaller operators to scale before entering the VAT net.”
Raubenheimer explains that this adjustment is important. “Raising the VAT threshold addresses the fact that the cost of doing business has increased significantly in recent years. It provides relief to small enterprises, improves cash flow flexibility and reduces compliance pressure at a critical stage of growth.”
Equally significant is the decision to withdraw R20 billion in previously proposed tax increases following a stronger-than-expected revenue performance. For business owners who were expecting higher tax liabilities, this provides welcome certainty and preserves working capital. Adjustment of individual income tax brackets and exemptions 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 sales of small businesses by older persons increases from R1.8 million to R2.7 million, and the eligible business value threshold increases to R15 million. This creates better flexibility for founders planning retirement or ownership changes.
“This change strengthens the long-term business ecosystem,” says Raubenheimer. “Entrepreneurs are more likely to formalize and grow their enterprises when exit options are tax efficient and predictable. This supports intergenerational wealth creation and encourages investment in scalable enterprises.”
However, cost pressures remain, he warned. Inflation-linked increases in fuel duty and excise duty will hit supply chains, especially transport-intensive sectors like 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 says. Gross debt is projected to stabilize at 78.9 percent of GDP before declining over the medium term, while the consolidated budget deficit continues to decline. South Africa's removal from the FATF gray list and its recent credit rating upgrade reinforce the message of restored fiscal credibility.
This reliability matters to business. This affects borrowing costs, investor appetite and currency stability. “When debt stabilizes and primary surpluses strengthen, systemic risk reduces,” Raubenheimer explains. “This improves the environment for raising capital, funding expansion and long-term planning. Sustainability may not be headline-grabbing, but it is fundamental.”
Infrastructure remains central to the development strategy, with public sector investment expected to exceed R1trillion over the medium term. The reforms in energy and logistics are aimed at unlocking private participation and removing bottlenecks that have hindered exports and increased operating costs. The growing pipeline of public-private partnership projects presents opportunities for businesses in construction, consulting, finance and technology.
Also, the projected economic growth of 1.6 percent in 2026, rising to 2 percent by 2028, underlines that the demand situation will remain relatively modest. Growth will likely favor well-managed businesses with strong financial controls and strategic positioning.
“The 2026 budget does not promise rapid expansion, but it does reduce fiscal uncertainty, reduce compliance pressure on small companies and strengthen the pace of structural reform,” Raubenheimer concluded. “In a stable but competitive environment, businesses that prioritize opportunities linked to financial discipline, governance and infrastructure will be best positioned to profit in the years ahead.”
Business owners who want clarity on how Budget 2026 impacts their tax, cash flow and growth strategy can connect with Outsourced CFO's team for tailored guidance. To learn more about the services OCFO offers or to contact the team, visit www.ocfo.com.
About the Company: Outsourced CFO is a global financial advisory firm supporting over 1300 organizations 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 full suite of services including partial 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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