On 20 January 2021, the following Acts were promulgated:

• Rates and Monetary Amounts and Amendment of Revenue Laws Act 22 of 2020 (“2020 Rates Act”)
• Taxation Laws Amendment Act 23 of 2020 (“2020 TLAA”)
• Tax Administration Laws Amendment Act 24 of 2020 (“2020 TALAA”)

The 2020 Rates Act gives effect to the annual changes in rates and monetary thresholds, and increases of the excise duties on alcohol and tobacco.

The 2020 TLAA provides for the levy of duties, and refunds, on export tax and the administration thereof. It inserts export duty into the Customs and Excise Act No 91 of 1964 (“the Customs Act”), which will come into operation on 1 March 2021.

In addition, it has amended the tax law provisions concerning Special Economic Zones (SEZs), to align the sunset dates in the SEZ tax provisions. The provisions of the SEZ tax regime cease to apply in respect of any year of assessment commencing on or after 1 January 2028. The basis for 1 January 2028 as the sunset date is that it allows the incentive to apply for a ten-year period from the approval of designated SEZs by the Minister of Finance in terms of section 12R (3) of the Act.

Customs impact of the 2020 TALAA amendments to the Customs Act:

• Provision has been made for information sharing relating to purchases at duty free shops and the protection of such information as well as the publication of tariff determinations with a view to enhancing consistency and transparency in respect of the classification of goods. Rules will be published in due course dealing with the how and when the publication will take place.
• Movements of goods in bond - of containerised goods to container depots/terminals are now permitted using a manifest only and without the need for security in terms of the Customs legislation.
• Change to correcting entries: done by way of voucher of correction/substitution bill of entry with the proviso that such substitution cannot amend purpose codes.

From 1 March 2021, export duty will be introduced. Accordingly, the act has now included matters of valuation of exports for purposes of calculating duty as well as liability provisions for payment of duty and permit requirements (all these provisions previously only applied to imports).

Amendments to Carbon Tax

1. Automatic Adjustment to the Carbon Fuel Levy

Non-stationary GHG emissions from petrol and diesel used for road transport are for purposes of the administration of the carbon tax incorporated in the current fuel levy as the carbon fuel levy in terms of the Customs and Excise Act.
In terms of Note 6 to Part 5A of Schedule No. 1 of the Customs and Excise Act, the fuel levy consists of the general fuel levy and the carbon fuel levy. The current cents per litre rates of the general fuel levy and carbon fuel levy are specified in Note 7. In order to create the necessary explicit link between the carbon fuel levy rate and the carbon tax rate, these Notes are amended to include the formulas to calculate the carbon fuel levy rates.
The reason for the change is to allow for an automatic adjustment to the carbon fuel levy where the carbon tax rate changes annually as provided for in Section 5 of the Carbon Tax Act. This link would enable SARS to implement automatic adjustments in the Customs and Excise Schedules. The amendment came into operation on 20 January 2021.

1. Allowing a Carbon Tax “Pass Through” for the regulated liquid fuels sector

The Carbon Tax Act provides for all direct non-stationary and stationary GHG emissions from diesel and petrol use, implemented through the fuel levy mechanism, to be deducted from the combustion related emissions of a taxpayer. Currently, GHG emissions from crude oil and synthetic coal-to-liquid and gas-to-liquid refining processes qualify for tax-free allowances up to a maximum of 90 per cent and 95 per cent respectively. Due to the regulated nature of petrol and diesel fuel prices, refineries are unable to recover these carbon tax costs.
Considering the maximum tax-free allowances for fuel combustion and fugitive emissions, amendments are proposed to allow a limited recovery of the carbon tax costs for regulated fuels.Therefore, a new sub-section has been inserted in Section 6 of the Carbon Tax Act to allow for the deduction of the carbon tax cost offset of 0.01 cents per lite against the payable tax for refineries for petrol produced.

Should you require assistance with the above, please do not hesitate to email Cova Advisory or call us on 011 568 3340.

Cova Advisory & Associates