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South Africa: National Budget Speech, 2023 – Introduction of Rules governing Customs and Excise Duty Deferrals

22 February 2023
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Introduction of Rules governing Customs and Excise Duty Deferrals

  • There is currently no formal framework specifying the conditions for deferment of customs and excise duties. It is therefore proposed that SARS is empowered to prescribe the specific conditions under which a deferment of duties will be allowed, in terms of the Rules to the Customs and Excise Act.

Prescription of unclaimed provisional payments

  • There are currently no provisions in the Customs and Excise Act relating to the liquidation of provisional payments (primarily, payments that serve as security against the release of detained shipments where SARS is in the process of conducting an audit) – particularly in respect of payments that are not claimed back by the trader after the investigation or other process has been completed.
  • Treasury proposes amendments aimed at enhancing the current processes and procedure for such payments below a specified amount, and for payments that remain unliquidated after a specified period Treasury also plans to introduce a prescription period for unclaimed provisional payment amounts.

Excise duty increase on alcoholic beverages and tobacco products

  • Excise duties on alcohol and tobacco will increase in line with expected inflation of 4.9%, in line with the existing excise policy. Currently, the guideline excise tax burdens for wine, beer and spirits remain set at 11%, 23% and 36%, respectively, of the weighted average retail price of these products.
  • This increase has been applied to the tobacco product manufacturing sector notwithstanding excise duty collections on tobacco products remaining below pre-pandemic levels.
  • The alcohol and tobacco manufacturing industries are currently subject to an ongoing Policy Review process. The alcohol review paper will be published soon after the Budget, and the tobacco review paper will be published later in the year. Consultations on the excise policy for these products will take place after the release of the discussion papers.

Changes to the Health Promotion Levy 

  • To enable stakeholders in the sugar industry to restructure, given the challenges from greater regional competitive pressures and the effect of recent floods and public unrest, there will be no increase in the health promotion levy in 2023/24 and 2024/25.
  • Government will soon publish a discussion paper on the levy for consultation on proposals to extend the levy to pure fruit juices and lower the 4-gram threshold.