The South African Revenue Service (South African Revenue Service) is introducing a modernised Diesel Refund System, aimed at making the refund process simpler, faster, and more transparent for qualifying businesses.
For many operators in the farming, forestry, and mining sectors, diesel refunds are an important part of managing operational costs. The upcoming changes represent one of the most significant updates to the scheme in years, affecting both how refunds are claimed and how much can be claimed.
Here is what you need to know before the changes take effect.
A Shift Away from the VAT System
Historically, diesel refunds were processed as part of the VAT return. This often led to delays and administrative complexity, especially when VAT audits affected diesel claims.
Under the new system, diesel refunds will be administered as a stand-alone process under Customs & Excise, governed by the Customs and Excise Act No. 91 of 1964.
This means diesel refund claims will no longer form part of the VAT return and will instead be processed separately through a dedicated system.
The goal is to reduce disputes, improve compliance monitoring, and streamline the refund process.
Increased Refunds for Primary Sector Businesses
One of the most welcome changes is an increase in the percentage of diesel that qualifies for refunds.
Currently, Note 6 to Part 3 of Schedule 6 of the Act allows qualifying users to claim refunds on 80% of eligible diesel purchases and usage.
From 1 April 2026, this will change for primary sector claimants operating on land, including farming, forestry, and mining operations.
Eligible businesses will now be able to claim a refund on 100% of qualifying diesel used in approved activities.
In practical terms, the change will first appear in the April 2026 claim period, which is submitted with the May 2026 VAT cycle.
This increase aims to simplify administration and provide additional financial support to these key sectors of the economy.
Key Features of the New System
The modernised diesel refund platform introduces several improvements designed to reduce administrative friction:
- Separate processing from VAT returns
- Digital claim submission through SARS eFiling
- Automated compliance checks on submitted claims
- Real-time status tracking of refund claims
These changes should significantly improve transparency and reduce the uncertainty businesses often experience when waiting for refunds.
What Businesses Need to Do
To ensure a smooth transition, qualifying diesel users and suppliers should prepare ahead of the April rollout.
Important steps include:
1. Register on the new SARS eFiling diesel refund platform
Registration will open during April 2026.
2. Maintain accurate diesel usage records
Proper record-keeping and diesel logbooks will remain essential to substantiate claims and pass compliance checks.
Businesses that are not adequately prepared may experience delays when the new system goes live.
How This Will Affect Your VAT Returns
Because the diesel refund system will operate independently, there will be some important changes to the VAT return process.
Businesses should note that:
- VAT returns will no longer include diesel refund claim fields
- Diesel refund audits will take place separately on the new platform
- VAT refunds may be processed faster, as diesel claims will no longer slow down the process
- VAT returns will still show the applicable claim period, but they will not process the diesel refund
Separating the two systems should ultimately make cash-flow planning more predictable for affected businesses.
Final Thoughts
The new diesel refund framework represents a meaningful step toward simplifying compliance and improving efficiency in the refund process.
For businesses in agriculture, forestry, and mining, the combination of a digital platform and the increase to a 100% eligible diesel claim could result in both administrative savings and improved cash flow.
However, preparation will be key. Early registration and strong record-keeping will ensure businesses are well positioned to benefit from the new system.
If your business claims diesel refunds and you would like assistance preparing for the transition, feel free to reach out to our team for guidance.
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