The diesel refund system was implemented in 2000. It is aimed at supporting primary industries that rely on diesel for their operations and allows qualifying businesses to claim a refund on a portion of the general fuel levy and the Road Accident Fund (RAF) levy paid when purchasing diesel.
The RAF levy for diesel is currently set at R2.18 per litre of diesel and is used as source of revenue for the RAF that is responsible for compensating victims of motor vehicle accidents.
Qualifying businesses that can claim a refund under the diesel refund system include those in the mining, agriculture, forestry, and fishing industries. Businesses must meet certain criteria to qualify for the refund as authorised by the Customs and Excise Act.
Diesel refund claims are offset against VAT liability that is payable for the tax period concerned, or alternatively, the diesel refund claim increases any VAT refund that is due to the vendor.
In light of the current electricity crisis, the 2023 Budget Review states that manufacturers of food products will now receive a comparable refund on the RAF levy for diesel consumption during their manufacturing process. This measure will come into effect from 1st April 2023 and refunds will be issued once the system is developed, continuing until 31st March 2025. The intention behind implementing this relief is to minimise the impact of power outages on food prices and as such, this announcement is welcomed.