As is the case each year, government proposes an increase in duties and levies for excisable products.
Tobacco and alcohol – an increase in excise duties on alcohol and tobacco products by between 7.4% and 9% in 2019/2020. Per example, the following:
Can of beer: increase of 12 cents to R1.74;
750ml bottle of wine: increase of 22 cents to R3.15;
750ml bottle of sparkling wine: increase of 84 cents to R10.16;
Bottle of whiskey: increase of R4.54 to R65.84;
Pack of 20 cigarettes: increase of R1.14 cents to R16.66;
Typical cigar: increase of 64 cents to R7.80; and
There will be no change to the excise duty on sorghum beer.
Environmental and health taxes
- Sugary beverages/Health Promotion Levy: a tax of 2.1 cents per gram is currently applied for every gram of sugar beyond the first four grams, which are levy-free. To avoid an erosion in the value of the tax due to inflation, the levy rate will increase to 2.21 cents per gram in excess of four grams of sugar per 100ml from 1 April 2019.
- Fuel taxes will increase by 29 cents per litre for petrol and 30 cents per litre for diesel, as follows:
- General fuel levy: Increase of 15c/litre from 3 April 2019;
- Road Accident Fund levy: Increase of 5c/litre from 3 April 2019; and
- The introduction of a carbon tax on fuel of 9c/litre on petrol and 10c/litre on diesel, from 5 June 2019. Diesel refunds cannot be claimed against this tax.
- The farming, forestry and mining industries are refunded levies paid when diesel is purchased. As this refund is intended to offset the RAF levy these users pay, but as the diesel users still receive benefits from the RAF if they experience accidents involving motor vehicles (even if the accident is off-road) it is proposed that the RAF levy diesel refund benefit for these primary production industries be limited to ensure that diesel users in these sectors equitably contribute towards their RAF indemnity.
- The carbon tax will be implemented on 1 June 2019.
- Vehicles produced locally are taxed at a higher rate than imported vehicles. To remove this anomaly, Government proposes to align the tax treatment.
- Government intends to start taxing electronic cigarettes and tobacco heating products. The National Treasury and the Department of Health will consult on the appropriate mechanisms, structure and timing of the tax.
- The fuel levy is currently imposed on petrol, diesel and biodiesel. Fossil fuels such as mineral ethanol, illuminating paraffin, aviation kerosene, liquefied petroleum gas, compressed natural gas – as well as biofuels such as bioethanol and biogas – are not subject to fuel taxation. As these fossil fuels and biofuels are not subject to RAF, but claims may be made to the RAF if vehicles using these fuels are involved in an accident, Government will review the scope and definition of fuel levy goods in the Customs and Excise Act (1964).
- SARS has compiled an excise rewrite discussion document that will be published for public comment as part of redrafting the excise duty legislative framework. The current duty-at-source system is reviewed to identify possible reforms. SARS will engage representative industry bodies and responsible Government departments on reform proposals that require refinement.
- Concerns regarding duty-free shops operating within the country have been noted by government. The legislative framework governing duty-free shops will be reviewed to minimise any abuse and risks that may be occurring.
- Manufacturers and importers of alcoholic beverages must obtain compulsory tariff determinations before these beverages can be removed from the excise manufacturing warehouse or cleared for home consumption upon the first importation. Bulk wine that is removed from one excise manufacturing warehouse to another is used as an input for further manufacturing and is not the final alcoholic beverage that should be subject to the tariff determination requirement. These bulk wine removals between warehouses will therefore be exempted from the obligation.
- The 2018 Budget strengthened the fiscal marking, tracking and tracing intervention for tobacco products. Over time, the intervention will be expanded to include other excise and levy products where feasible.
- Consultations in relation to the diesel refund administration demonstrated the need for developing industry-specific provisions for each sector for a focused and effective diesel refund administration system. A proposed system will shift the basis from eligible users to eligible activities. The design of the new standalone diesel refund administration will be outlined in draft rules and notes that will be developed and published for public comment during the course of the year.
- Implementing the carbon tax requires SARS, the Department of Environmental Affairs and the Department of Energy to share client-specific information. Provisions in the Customs and Excise Act that permit information sharing with strict confidentiality will be enhanced for the purposes of carbon taxation and the associated regulation of greenhouse gas emissions and energy efficiency.
- Ad valorem taxes apply to televisions and monitors with screens larger than 45 cm, irrespective of their end use. “Smart” technology items are harder to distinguish and therefore difficult to categorise. To prevent these items from escaping ad valorem tax, it is proposed that the computer category be expanded to include any apparatus with a screen larger than 45cm.
- Ad valorem taxes on gaming consoles are currently limited to consoles that use a television screen. However, games are now displayed on many different items. It is proposed that the provisions be amended to include any external screen or surface on which gaming console images can be reproduced.
- Government will review provisions relating to duty rebates and refunds in circumstances of vis major (an unpreventable incident caused by a superior external force) in the Customs and Excise Act and its schedules to align them with international best practice. The review potentially follows the SCA judgment of SARS v Encarnacao N.O. (543/2017)  ZASCA 71 (29 May 2018), in relation to rebate item 412.09 in Schedule 4 of the Customs and Excise Act, which provides guidance pertaining to what occurrences fall within vis major and the meaning of ‘such goods did not enter into consumption’.
- Government will consider amendments enabling the confidential disclosure of names and associated reference numbers of customs clients, as well as other information necessary to verify legitimate financial flows. The proposed amendment will align the Customs and Excise Act with the similar approach adopted in the Tax Administration Act (2011).
Additional information is available upon request.