SOUTH AFRICA: BUDGET SPEECH 2022 – VAT

Wednesday, February 23, 2022
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There are no proposed increases to the VAT rate.

Key VAT proposals are:

  • Updating of VAT on electronic services regulations in line with international trends.
  • An exception from the requirement to register as a VAT vendor in terms of the electronic services regulations, based on ‘once-off’ surpassing of the ZAR 1 million registration threshold.
  • Further reviews of certain previous section 72 directions (directions to overcome difficulties, anomalies or incongruities).

Key customs and excise tax changes

Fuel levies

To provide tax relief to consumers, the general fuel levy and Road Accident Fund levy will not increase in 2022. Government is also reviewing all aspects of the fuel price. The carbon fuel levy will increase by 1 cent per litre.

Customs and excise

Specific excise duties on alcoholic beverages and tobacco products generally increase by between 4.5% and 6.5%, apart from traditional African beer, with no increase.  The key specific excise duty increases can be summarised as follows:

Product

Old rate

New rate

Malt beer

ZAR 115.08 / litre of absolute alcohol (196,86c / average 340ml can)

ZAR 121.41 / litre of absolute alcohol (196,97c / average 340ml can)

Traditional African beer

7,82c / litre

7,82c / litre

Traditional African beer powder

34,70c / kg

34,70c / kg

Unfortified wine

ZAR 4.74 / litre

ZAR 4.96 / litre

Sparkling wine

ZAR 15.51 / litre

ZAR 16.52 / litre

Ciders and alcoholic fruit beverages

ZAR 115.08 / litre of absolute alcohol (196,86c / average 340ml can)

ZAR 121.41 / litre of absolute alcohol (196,97c / average 340ml can)

Spirits

ZAR 230.18 / litre of absolute alcohol

(ZAR 74.23 / 750ml

bottle)

ZAR 245.15 / litre of absolute alcohol

(ZAR 79.06 / 750ml

bottle)

Cigarettes

ZAR 18.78 / 20 cigarettes

ZAR 19.82 / 20 cigarettes

Tobacco products in ‘sticks’

ZAR 7.05 per 10 sticks

(ZAR 14.10 per 20 sticks)

ZAR 7.43 /10 sticks

(ZAR 14.86 per 20 sticks)

Cigarette tobacco

ZAR 21.12 / 50g

ZAR 22.28 / 50g

Pipe tobacco

ZAR 6.26 / 25g

ZAR 6.63 / 25g

Cigars

ZAR 104.16 / 23g

ZAR 110.93 / 23g

 

There will be a new tax on vaping products of at least ZAR 2.90 per millilitre, from 1 January 2023.

A new tax will also be introduced on beer powders from 1 October 2022.

Government is in the process of reviewing the alcohol and tobacco excise duty policy framework, and review papers will be released shortly.

A new ‘advance tax ruling’ system will be implemented in the customs and excise legislation.

Health promotion levy

After three years of no changes, the health promotion levy will be increased to 2.31 cents per gram of sugar.

Environmental taxes (including carbon tax)

The carbon tax  rate increased by 7.5%,  from  ZAR 134 to ZAR 144 per tonne of carbon dioxide equivalent, from 1 January 2022.   The first phase of the carbon tax, with substantial allowances and electricity price neutrality, will be extended to 31 December 2025.  However, the carbon tax rate will increase progressively to USD 20 per tonne by 2025, and to a minimum of USD 30 per tonne by 2030. On this basis the Minister of Finance cautioned companies to make plans to reduce their emissions.

The plastic bag levy will increase from 25 cents to 28 cents per bag for fossil-based bags, from 1 April 2022. An upstream plastic tax and a tax on single‐use plastics will be investigated.