The Mechanics of Diesel Refunds in South Africa

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What is it?

Qualifying operators that perform eligible activities in certain categories and industries that are registered for VAT purposes (under the Value-Added Tax Act, No. 89 of 1991), may apply for registration for the diesel refund.

Who is it for?

  • On Land: Farming, mining, forestry.
  • Offshore: Commercial fishing vessels, coasting vessels, off-shore mining, vessels owned by the NSRI, marine industry research vessels, coastal patrol vessels, fibre-optic. telecommunication service vessels.
  • Harbour Vessels: Operated by Portnet, used by in-port bunker barge operators
  • Rail: Locomotives used for rail freight.
  • Electricity Generation Plants: Such plants with a generation capacity exceeding 200 Megawatt per plant.

Qualifying entities in South Africa, who are registered for VAT. must apply for Registration with SARS to participate in the Diesel Refund system by completing a VAT 101D.

What is the refund?

The refund is a function of total purchases, eligible purchases, non-eligible purchases, and various other factors. 80% of diesel consumption qualifies for a SARS refund. The rebate payments on total diesel production are sourced from the general fuel levy, which is about R3,40 per litre. The rebate is calculated at 40% of the general fuel levy which equals about R1,35 per litre.

What must be done to ensure compliance with the Act?

A key matter is to ensure that detailed logbooks are maintained of all diesel purchased and issued for eligible machinery conducting eligible activities. Diesel refund claims must be supported by logbooks which indicate a full audit trail of diesel fuel for which refunds are claimed, from purchase to use thereof. To comply with these requirements, two types of logbooks are recommended by legislation, alternatively, they can be combined into one document. These two logbooks are a diesel storage facility (Tanks, bowsers, cassettes, etc.) logbook and a diesel usage logbook.

PetroMan SA’s fuel management system (FMS) diesel refund functionality is designed for this very purpose. The user-friendly diesel refund module includes:

  • Seamlessly automated usage logbook creation for both eligible and non-eligible purchases
  • Automated process for tracking storage and usage
  • Compatible tax authority reports
  • Legislative change updates
  • Suitability for agriculture, forestry, generation, marine, mining and rail
  • Exporting to various financial systems for accurate cost-centre reporting

PetroMan SA has made it their purpose to develop world-class hydrocarbon management systems that are both cost-effective and user-friendly. As an OEM, PetroMan SA markets its unique fuel management solutions under the PetroMan® brand, providing meticulous, real-time, measuring, and reporting that allows clients to intricately control hydrocarbon quality and usage. PetroMan SA continually develops and implements robust and up-to-date hardware and software platforms and has supplied FMS solutions to the mining sector, across Africa, since the 1990s.

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