The new diesel refund system will start later than planned, as more time is needed to pilot and test it.

It is extremely important for all diesel refund users to familiarise themselves with the requirements of the current and the new diesel refund scheme legislation and system changes, explains Kagiso Nonyana.

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The fuel crisis has intensified financial pressure on businesses, making relief measures such as diesel rebates increasingly important.

The government responded by implementing the distillate fuel refund system (diesel refund scheme) to support primary production in agriculture, mining, forestry and fishing.

The diesel refund did not extend to secondary activities such as the processing of goods and manufacturing; however, in 2023, it was extended to foodstuff manufacturers as a relief measure during South Africa’s loadshedding crisis. The dispensation was for a limited period of two years (1 April 2023 to 31 March 2025).

In order to claim a refund through the diesel refund scheme, the claimant should be registered as a vendor for VAT purposes, and registered as a “user” for customs and excise purposes.

Schedule 6, Part 3, Note 6 of the Customs and Excise Act prescribes the requirements of the diesel refund system. It provides that the purchase of the diesel must be an “eligible purchase”, meaning distillate fuel (diesel/biodiesel) bought for use in sectors such as industrial or primary production.

Users are entitled to claim a certain percentage of eligible purchases depending on their sector. For example, on-land users in the farming, forestry, and mining sectors can typically claim a refund on 80% of eligible purchases. However, in an effort to align the policy intent, which is to provide cost relief, this has been increased to 100% of eligible purchases with effect from 1 April 2026.

Schedule 6 also lists the qualifying activities for each industry. In March 2022, the finance minister published new amendments, including that the user has to create a diesel refund user registration profile electronically and provide the following information:

• Category of qualifying activities performed;
• Location where the qualifying activities are performed;
• Storage facilities for eligible purchases;
• Assets powered by eligible purchases of the diesel refund user, with the identifying features, make, model and fuel tank capacity thereof, as well as the physical address of any such asset that is situated at a fixed geographical location.

Previously, to claim a refund through the diesel refund scheme, the user was required to register as a “user” for Customs and Excise purposes, and register as a vendor for VAT purposes as the refund claims are administered through the VAT system. Schedule 6 now includes:

• “Wet contractors” in the definition of a “user”, meaning distillate fuel is supplied with the vehicle, vessel, machine or other equipment contracted or hired.
• Equipment and vehicles regarded as dedicated for the performance of predominantly qualifying activities no longer require a detailed usage logbook; the user is only required to substantiate the receipt of the diesel and the dispensing thereof.

To the extent that the user performs more than one category of primary activities or any non-qualifying activities, the user must keep a detailed logbook demonstrating how the diesel was obtained, purchased, collected, delivered, stored, dispensed for use, used, disposed of or lost in respect of qualifying activities or non-qualifying activities.

In November 2025, the South African Revenue Service (SARS) held workshops to discuss these amendments.

By the following month, SARS made a formal announcement that claims would no longer be administered through the VAT system but on a standalone system (the new diesel refund system) and that system registration would be open from April 2026.

However, in March 2026, SARS announced that the new diesel refund system would open later than initially communicated, as more time was needed to pilot and test the system.

It is important to note that even though the 2022 amendments were published in March 2022, the effective date has still not been provided, and they cannot yet be applied. SARS has held a workshop for stakeholders to discuss the amendments, but it is unclear when the effective date will be announced.

Unfortunately, until the effective date is announced, users are still required to adhere to the onerous requirements.

The diesel refund scheme is based on the principle of self-assessment and, therefore, places the burden on the user to provide proof of entitlement. The user should consequently provide proof that the diesel was purchased, stored and used for the qualifying activity it engages in. Therefore, the user has to be in possession of all the necessary documentation prescribed in the Customs and Excise Act, such as logbooks, invoices, to fully discharge this onus.

We caution that it is extremely important for all diesel refund users to familiarise themselves with the requirements of the current and new diesel refund scheme legislation and system changes in order to fully benefit from it and to ensure full compliance.

The Customs and Excise Act contains harsh penal provisions, therefore important for users to be compliant at all times.

Kagiso Nonyana is a senior manager in BDO South Africa’s Indirect Tax practice.

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