Diesel refund for manufacturers of foodstuffs | Blog

Estimated reading time: 10 minutes

For the implementation of the proposal, Part 3 of Schedule No. 6 to the Customs and Excise Act (the Act) will be amended by the insertion of new provisions, which are currently in draft. The South African Revenue Service (SARS) has also issued the applicable (draft) registration forms. 

Although the legislation for the refund is currently in draft, SARS has confirmed that every approved refund application will be issued with effect from 1 April 2023.        

We discuss the key aspects of the draft provisions below. It should be noted that these draft provisions may be subject to change. 

Extent of refund

The refund has been set at 80% of the Road Accident Fund (RAF) levy, which is currently R2.18 per litre of diesel. Accordingly, from 1 April 2023 taxpayers are entitled to a refund of R1.74 per litre of diesel purchased for use in the manufacture of foodstuffs. 

Requirements for eligibility 

In order to be eligible for a refund, a taxpayer must satisfy the following requirements: 

• manufacture of foodstuffs
• from manufacturing premises
• using electricity generated from diesel used in stationary fixed electric power generators. 

The terms ‘manufacture’, ‘foodstuffs’, ‘manufacturing premises’ and ‘electricity generation’ are defined in the (draft) Schedule No. 6 to the Act.

Administrative and compliance requirements

Registration

• The taxpayer is required to register as a ‘refund user’ and to also register each of its manufacturing premises using form DA 185 and annexure DA 185.4A3 (approval will be issued with effect from 1 April 2023 as the date on which the refund user became eligible for claiming refunds).
• The refund user must be a registered Value-Added Tax (VAT) vendor.

Ongoing compliance

Claims must be submitted using form DA 66 together with all necessary supporting documents (specified on the schedule).