The South African Revenue Service is implementing its most extensive overhaul of the diesel refund system since its launch in 2001, aiming to enhance compliance and efficiency after costly disputes, including a R5 billion settlement with Eskom over improperly denied refunds.
The agency had rejected Eskom’s claims for two years before conceding the error, leading to a settlement that faced legal challenges from the Road Accident Fund, which argued the payout would impair its ability to compensate accident victims. As reported by Moneyweb, the High Court ultimately ruled in favour of the fund, blocking Sars from deducting the amount from fuel levy transfers.
SARS – SARS Intensifies Crackdown on Tax Evaders
Diesel refunds surged from R7.3 billion in the 2023/24 fiscal year to R13.6 billion in 2024/25, primarily driven by the Eskom resolution. The scheme provides partial or full rebates on general fuel and Road Accident Fund levies for producers in eligible sectors, mitigating high diesel costs that can account for up to 10 per cent of input expenses in agriculture.
Sars is introducing a standalone platform for registering and claiming refunds, decoupling the process from value-added tax to address administrative burdens on small businesses and joint ventures. This resolves issues like stringent logbook requirements and exclusion risks, with simplified records tailored to specific entities.
The new system incorporates risk profiling and pre-application validation to curb fraud, alongside traceability through mandatory seller registration. Claimants will benefit from real-time tracking and automated checks, reducing delays in a scheme vulnerable to abuse under the previous framework.
SARS – SARS Tightens Grip on Trust Compliance
The reform follows a thorough review that prompted legislative changes, expanding eligibility to sectors such as forestry, marine research, coastal patrols, fibre optic services, large electricity plants, and rail freight locomotives. According to BusinessTech, the digital platform, set for piloting until February 2026, will go live in April, ensuring end-to-end oversight of the supply chain.
Intensified audits have led to disallowed claims for inadequate records, particularly among farmers, while industry groups support the shift to an electronic system akin to e-filing. As reported by SARS Tax Statistics Highlights, these refunds play a critical role in primary production, supporting economic growth in sectors contributing over 2 per cent to GDP amid fuel price volatility.