Overall, VAT and customs duties shortfalls are attributable to a weaker consumer outlook and substantially lower import growth.
Increase in VAT also applies to Importation
VAT, which includes VAT upon importation, is proposed to increase by 1% to 15%, effective 1 April 2018.
As is the case each year, government proposes an increase in duties and levies for excisable products.
- Ad Valorem Excise duties on luxury products (effective 1 April 2018):
- Motor vehicles: increased from 25% to 30%;
- Cellular phones: The flat rate of 7% may be replaced with a progressive rate duty structure based on the item’s value. Classification of cellular phones may be amended to include “smart phones”; and
- General: 5% rates to be increased to 7% and 7% rates to be increased to 9%.
- Tobacco and alcohol (effective 21 February 2018):
- Tobacco: Increase of 8,5%;
- Alcohol: Increase of between 6-10%;
- Government to explore methods to reduce consumption, which may include minimum price and stronger enforcement; and
- Traditional African beer is not affected.
Environmental & Health Taxes (Effective 1 April 2018):
- Plastic bag levy: 50% increase to 12 cents/bag;
- Incandescent light bulbs: Increased from R6 to R8;
- Vehicle emissions tax increased to:
- R110 per gram above 120g CO2/km for passenger vehicles;
- R150 per gram above 175g CO2/km for double cab vehicles; and
- Sugary beverages: To be implemented on 1 April 2018. A policy on the use of the taxes collected to encourage healthy choices is to be published soon.
Fuel Taxes (Effective 4 April 2018):
- General fuel levy: Increased by 22 cents/litre; and
- Road Accident Fund levy: Increased by 30 cents/litre.
Special Economic Zones
Six special economic zones are to be approved to encourage investment in manufacturing and tradable services sectors to support exports and economic growth to promote jobs. Coega, Dube Trade Port, East London, Maluti-a-Phofung, Richards Bay and Saldanha Bay are proposed to offer attractive incentives.
Amendments to the Customs and Excise Act, No 91 of 1964 CEA is considered to prevent ‘forestalling’, which is a practise where abnormal volumes of products are moved from warehouses into the market in order to avoid increases in excise duties.
The extension of the use of fiscal markers is to be introduced by way of amendments to the CEA, which has as its goal to eliminate illicit trade in tobacco products. Additional products are intended to be marked.
Additional information is available upon request.