Customs and Excise
The following changes to the current customs and excise legislation were proposed:
Specific Excise Duties (“sin taxes”)
The annual changes to the sin taxes were expected, with an increase in the rates of excise duties payable on tobacco products and alcoholic beverages in line with a targeted total tax burden (excise duties, plus VAT) of 23%, 33%, 43% and 52% of the average retail price for wine, clear beer, spirits and tobacco, respectively.
Following an announcement in the 2011 Budget, the appropriateness of these benchmark tax burdens was reviewed. The current benchmark for wine will remain unchanged but the benchmark for beer and spirits will increase to 35% and 48%, respectively. These increases will be phased in over the next two years. This means that we will see bigger increases for both spirits and beer in the coming years.
The excise duty on malt beer increases by 9.9% from R53.97 to R59.36 per litre of absolute alcohol, which equates to an average increase of 9.23c per 340ml can to a total of 100.98c per 340ml can.
For the seventh year, no changes were proposed to the excise duty on traditional beer and traditional beer powder, which remain at 7.82c per litre and 34.7c per kg, respectively.
Wine incurred increases in excise duty of 7.76% for unfortified, 6.0% for fortified and 8.03% for sparkling. This has resulted in the rates per litre on these products equalling R2.50, R4.59 and R7.53 per litre, respectively.
Ciders and alcoholic fruit beverages received an increase in excise duty of 9.59%.
Spirits see an increase of 20.00% from R 30.00 to R36.00 per 750ml bottle (compared to the 10% of the previous year).
Smokers will also face increased prices as a result of increases in the excise duties on cigarettes (5.95%), cigarette tobacco (4.94%), pipe tobacco (8.05%) and cigars (5.01%).
The excise duty amendments on the above are effective from 22 February 2012.
The fuel levy has increased by 20c per litre for both petrol and diesel. An increase is proposed in the Road Accident Fund (“RAF”) levy, on both petrol and diesel, by 8c per litre from R0.80 to R0.88 per litre. This increase is intended to strengthen the RAF’s financial position and effectiveness.
The above proposals will become effective from 4 April 2012.
Advalorem Excise Duties
In the 2010/2011 Budget speech, the Minister of Finance announced the introduction of ad valorem duty on luxury motor vehicles (price exceeding R 900 000) effective 1 April 2011. This trend is continued this year, with the proposed introduction of ad valorem duty (effective 1 October 2012) on the following:
- Aeroplanes and helicopters with a mass exceeding 450kg but not 5 000kg at (7%);
- Motorboats and sailboats longer than 10m (10%).
General Customs and Excise Matters
- Customs transformation: The transformation of SARS Customs is gaining momentum (with the launch of Phase 3 at the Kopfontein Border Post, which will be rolled out to other offices later), and additional steps will be taken over the period ahead to achieve a fully integrated electronic customs capability;
- Electricity levy increase: The levy from non-renewable energy sources will be increased by 1c/kWh from 2.5c to 3.5c. The additional revenue will be used to fund energy-efficiency initiatives;
- Special economic zones (“SEZs”): These are geographically designated areas earmarked for targeted economic activity by the South African government to encourage investment and employment creation. Proposals for the introduction of the SEZs were tabled following the challenges experienced with the currently operational Industrial Economic Zones (“IDZ”). Draft legislation for the implementation of the SEZs has been published for public comment and various tax relief measures are being considered with a view to incentivise investors in these SEZs;
- Focus on under-valuation of imports: SARS will continue to focus its resources on rooting out under-valuation by certain traders on importation of goods into South Africa. SARS is working with industry to update a reference price database which will be used to detect under-valuation practices;
- Review of Value Added Tax (“VAT”) on indirect exports and temporary imports: Government will review the VAT treatment of temporary imports to promote local processing and beneficiation. VAT treatment of indirect exports by road will be reviewed to ensure that exporters are not prejudiced;
- VAT double charge for goods removed from an IDZ: The VAT double charge that occurs when goods are temporarily removed from the CCA and not returned within 30 days, is to be eliminated;
- Imported goods sold prior to entry for home consumption: VAT provisions relating to goods sold by foreign companies prior to entry for home consumption are to be reviewed as they result in the recipient of goods being liable for two VAT charges for the same amount;
- Implementation of one-stop border post agreement with Mozambique: The agreement between South Africa and Mozambique on a combined border control post and its annexures have been submitted to parliament for ratification;
- Carbon Tax Proposals: The Government will be publishing the second version (revised) of its draft policy paper on carbon for comment. The purpose of the revision is to minimise the impact on industry competitiveness, as well as to effectively manage South Africa’s transition to a low-carbon economy; and
- Taxation of transport fuel: A review of all transport fuels will be conducted to determine the equitable treatment thereof based on environmental characteristics as well as energy content.