In its first discussion paper since 2014, National Treasury and the South African Revenue Service (Sars) on 15 February published its ‘Review of the Diesel Fuel Tax Refund System’ for comment by 15 May.
According to the media release, these discussion papers are published to obtain comment on specific tax policy matters before draft tax legislation or a draft interpretation note is prepared.
Presently, the diesel refund system, introduced in the year 2000, provides full or partial relief for the fuel levy (FL) and Road Accident Fund (RAF) levy to primary producers in the agriculture, forestry, fishing and mining sectors. Introduced in a phased approach, it is aimed at protecting international competitiveness of local industries and reducing the road-related tax burden of the RAF levy for certain non-road users.
The discussion document follows o announcements in the 2015 National Budget 2015 to undertake a review of the administration system to address anomalies in the system related to qualifying activities and beneficiaries. National Treasury and th Sars committed to explore alternative, more equitable rules and administrative procedures following consultation with affected industries. The implementation of the new standalone diesel refund administration will have to be phased in to ease the compliance burden on beneficiaries and administrative burden on Sars.
The design of the proposed new system is envisaged to be finalised by the end of 2017after the public consultations, followed by an announcement of the details in the 2018 National Budget.