Diesel refunds set to exit the VAT system
Standalone refund system promises greater visibility, with both users and sellers required to register.
The South African Revenue Service (Sars) is set to launch a new standalone diesel refund system, separate from the value-added tax (VAT) system. This change is part of Sars's excise modernisation project, which will require all users and sellers of diesel to re-register. At first, only users needed to register for the diesel refund, but this will change with the introduction of the new system.
Senior Sars officials have explained the registration process and the rules governing the new system. Contractors operating on a wet basis will also be eligible for the rebate under the new system. The new legislation groups qualifying categories into eight industries, including agriculture, fishing, mining, and electricity generation.
The registration process is being rolled out in three phases, starting with the registration of users and sellers. This phase will be followed by the requirement for users and sellers to declare their relationships to Sars. The final phase will involve setting up users' profiles, including their qualifying activities, site plans, equipment, and applicable licences and permits.
The standalone diesel refund system aims to simplify administration, provide better visibility for Sars and taxpayers, and create a more dedicated process for diesel refunds. However, some questions remain unanswered, such as how multiple supplier relationships will be managed and how Sars intends to address longstanding issues related to logbooks and diesel usage records.
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