SARS has proposed a pre-emptive step to avoid an interpretation of the Customs & Excise Act that would have freed the petroleum industry from paying excise duty as well as the fuel and Road Accident Fund levies on certain petroleum products.

A Business Day report says to ensure that no effect is given to this interpretation, the National Treasury and SARS have proposed making changes to the Customs and Excise Act retrospective to 1 January 2002.

The proposed changes are included in the draft Taxation Laws Amendment Bill, which was released by the Treasury last week with the draft Revenue Laws Amendment Bill and regulations on carbon offsets and electronic services.

The changes regarding the taxation of petroleum products – namely aviation kerosene, illuminating kerosene, distillate fuel and specified aliphatic hydrocarbons – were not announced in the 2024 budget.

‘Substantive proposals outside the budget are exceptional and are made in response to exceptional events, such as the Covid-19 pandemic or the identification of pressing issues that pose a substantial threat to the fiscus,’ the Ministry of Finance said in a media statement.

‘An example of such an issue was the argument advanced by certain multinationals and their advisers in 2004 that dividends could be declared to offshore group companies free of tax.’

The proposed change is made retrospective to 2002 as that is when the World Customs Organisation issued a Harmonised System Convention, which is used as the basis for customs tariffs and for the compilation of trade statistics worldwide.

Full Business Day report