SEPTEMBER 2024 – SOUTH AFRICA
OFFICIAL INTEREST RATE
It is important that employers note the following:
Official interest rate reduced
The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) has reduced the repurchase (repo) rate by 25 basis points. The announcement was made on Thursday, 19 September 2024. The repo rate has been reduced by 25 basis points to 8.0% per year, effective from 20 September 2024. This means that the rate at which the SARB lends to your bank has decreased from 8.25% to 8.0%. For employers, the official interest rate applicable to payrolls will be 9.0%, effective from 1 October 2024.
The definition of “official interest rate” in the Seventh Schedule of the Income Tax Act means:
- In the case of a loan which is denominated in the currency of the Republic, the South African repo rate + 100 basis points; or
- In the case of a loan which is denominated in any other currency, the South African repo rate applicable in that currency + 100 basis points. Where a new repurchase rate or equivalent rate is determined, the new interest rate applies, for the purposes of this definition, from the first day of the month following the date on which that new repurchase rate or equivalent rate comes into operation.
To view the MPC’s statement, follow the link.
PLEASE NOTE: The implementation of this change requires an update of the payroll system parameters. If not done, you may incur penalties and interest. If you are unsure how to make the change, please contact your consultant for assistance.
