64 / 116
Oktober 2018
62
Diesel refund survey
results
highlight key problem areas
D
iesel is an important input cost
for many producers. In terms of
agriculture’s total expenditure on
intermediate goods and servic
es, fuel represented approximately 9%
(R12 billion) in the 2016/2017 financial year.
The diesel refund system supports primary
producers in the agriculture, forestry,
fishing and mining sectors by giving full or
partial relief for the fuel levy and the road
accident fund levy. These levies form part
of the per litre price of diesel. Businesses
involved in qualifying activities can apply
to register for the system with SARS and
then claim a refund, based on the use (not
purchases) of diesel.
The aim of the system is to support the
international competitiveness of the agri
culture, forestry, fishing and mining sectors.
Furthermore, it aims to provide relief from
the road related tax burden, for certain non-
road users involved in qualifying activities.
According to the Organisation for Economic
Co-operation and Development (OECD)’s
Producer Support Estimate, the level of
subsidies for South African agriculture is
amongst the lowest in the world. In this
context, the diesel refund is the main
support mechanism available to South
African producers.
The system was first introduced in
2000, using a phased approach. The ad
ministration of the refund system is
linked to the VAT system and accordingly,
businesses need to be registered for VAT
to register for the diesel refund. For this
reason, the payment of the diesel refund is
linked to other departments within SARS,
such as VAT and debtors. Taxpayers need
to be cognisant of their net position in terms
of VAT and diesel refunds as this has an
impact on the processing and payment of
diesel refunds. Maintaining detailed records
and supporting documents is crucial when
claiming a diesel refund.
However, complying with the logbook
requirements can be problematic. There
is uncertainty as to the specific logbook
requirements that are used by auditors
when auditing diesel refund claims and this
can lead to delays in the audit process and
payment of the refunds. The diesel refund
is conditional in the sense that until a claim
has been audited, SARS may cancel a claim
that was previously approved.
The diesel refund system is a valued sup
port structure for the qualifying industries,
such as agriculture. However, delays in the
payment of refunds have an impact on cash
flow, leaving a gap in cash flow that needs
to be managed.
Emerging farmers, not registered for VAT,
cannot currently use the refund system
(except for those in the sugar industry).
However, the National Treasury and SARS
are in the process of reviewing the system
and hosted further stakeholder consulta
tions during August 2018. One of the
proposals is to separate the administration
of the diesel refund and VAT systems.
Within this context, Agri SA and the
South African Institute of Tax Professionals
(SAIT) collaborated to conduct a survey
among users of the diesel refund system.
The aim of the survey was to identify any
problems experienced with using the
current system. The results will be used
to engage with SARS on how these issues
On farm level
Diesel Refund / VAT / SARS
Inputs
r Requier Wait,
head: Economics and Trade, Agri SA
a d
Erika de Villiers,
head of Tax Policy,
South African Institute of Tax Professionals
1. In which province/s do you submit VAT
returns for diesel refund claimants?
2. On whose behalf do you claim the diesel refund?