National Treasury’s diesel tax refund for food manufacturers is proving to be very complicated – and not as extensive as initially hoped.
There are many questions about how the refund will be implemented for businesses that do more than just food manufacturing on the same premises;It has long been argued that diesel used to mitigate load shedding by businesses should be exempted from paying at least the Road Accident Fund Levy attached to the fuel, as its use in this context has nothing to do with being on the road.
Counter to many expectations, food manufacturers will not be given full relief – the refund is only 80% of the Road Accident Fund levy. It also appears that the refund process will be complicated by red tape and admin, which PwC said seems onerous. “In practice, manufacturers of foodstuffs may also carry on other operations – i.e. not qualifying as foodstuff manufacturing – at the same premises and use the diesel to generate electricity to carry on all of these activities simultaneously. It is not clear how the diesel usage and concomitant refund should be determined in these scenarios.”