South Africa's SARS and Customs & Excise: Transfer-pricing Customs Value, Electricity Levy and Diesel-refund Compliance, What Businesses Must Do Now

South Africa’s customs and excise framework continues to evolve, with several machinery changes affecting how importers must treat customs value, how the environmental levy on electricity is administered, and how diesel-refund registration operates. This article sets out the compliance mechanics businesses should understand under the Customs and Excise Act, 1964, and the practical steps to take. Importers, multinational groups, electricity generators and diesel-refund users all face real exposure if obligations are missed: unpaid additional duty, lapsed refund eligibility and licence problems carry financial and compliance consequences. Because effective dates, thresholds and procedural details are updated periodically by SARS and in the Government Gazette, businesses should verify the current position against the official sources listed at the end before acting.

The sections below explain what is involved, who is affected, and the step-by-step actions to take.

Quick overview, three areas and who must care

Three separate but related matters arise under the Customs and Excise Act, 1964. Each has its own affected population and its own compliance mechanics. Treating them as a single update risks missing an obligation under one area while addressing another.

• Transfer-pricing and customs value. Importers must ensure that year-end transfer-pricing adjustments affecting declared customs values are properly reflected, the adjustment calculated, and any additional duty and import VAT settled, in line with the valuation provisions of the Customs and Excise Act and SARS guidance.
• Environmental levy on electricity. The environmental levy regime on electricity is administered by SARS; where the levy or its scope changes, manufacturing-warehouse licence holders must review their licensing position and any refund entitlement.
• Diesel-refund registration. Diesel-refund users and sellers must ensure they are correctly registered to retain refund eligibility, and should confirm the current registration requirements with SARS.

If your business imports goods from related parties, generates electricity under a manufacturing-warehouse licence, or claims diesel refunds, at least one of these areas applies to you, and in many groups more than one applies simultaneously.

Transfer-pricing and the customs-value procedure

One of the most commercially significant customs issues for multinational groups is how customs value is treated for intra-group transactions. The statutory basis sits in the valuation provisions of the Customs and Excise Act, 1964 (Act No. 91 of 1964), which govern the value for customs duty purposes, the particulars that must accompany an entry, and the rule-making powers under which SARS prescribes procedures. Importers should confirm the specific sections and any binding rules or guidance currently in force with SARS, as these are updated from time to time.

The practical problem is familiar to any group that imports from related suppliers. Transfer prices set at the start of a year are often provisional; year-end true-ups move the price up or down to land on an arm’s-length result. Those adjustments change the true transaction value of goods already cleared through customs, which means the customs value declared at import may no longer match the final price actually paid or payable. The issue is how that mismatch is reconciled, notified and settled.

Who is covered and the scope

These valuation considerations apply to importers who bring goods into South Africa from related parties and who are subject to a transfer-pricing arrangement that produces post-importation adjustments. In practical terms, this captures subsidiaries and branches of multinational groups, local entities that buy from an overseas parent or sister company, and any importer whose intercompany pricing is subject to a year-end adjustment. The relevant trigger is a change to the price actually paid or payable for imported goods after the goods have been entered for home consumption. The scope extends across product categories: it is the pricing mechanism, not the nature of the goods, that is relevant.

Notification of year-end transfer-pricing adjustments

Where a year-end transfer-pricing adjustment affects the customs value of goods already imported, the importer should address that adjustment with SARS rather than recording it internally alone. It is not enough to reflect the adjustment only in the group’s transfer-pricing documentation or income-tax return; the customs value itself must be reconciled through the appropriate SARS process. Importers should confirm the current notification and voluntary-disclosure mechanisms available for customs-value adjustments.

Addressing the adjustment is the gateway to the rest of the process: it establishes which bills of entry are affected and leads to the calculation and payment (or refund) of any duty and import VAT difference. Importers should build an internal trigger so that the customs team is alerted the moment a transfer-pricing true-up is finalised, rather than discovering months later that an adjustment was due.

Obtaining bill-of-entry and trade data from SARS

To prepare an accurate adjustment, importers need the underlying bill-of-entry data for the affected imports. SARS publishes customs and trade statistics and maintains records that can be accessed through its customs channels; importers should follow the current SARS process for obtaining their own entry records. The typical data fields an importer will rely on include the bill-of-entry number, the date of entry, the tariff classification, the declared customs value, the rate of duty applied, and the duty and import VAT originally paid.

The approach is straightforward: identify the import transactions that fall within the transfer-pricing adjustment period, retrieve the corresponding bill-of-entry records, and reconcile those records against the group’s accounting and transfer-pricing data. Getting this reconciliation right is what makes the subsequent calculation defensible. Where internal records and SARS data diverge, resolve the discrepancy before submitting anything.

Calculating the customs value adjustment, required fields and a worked example

The customs value adjustment calculation quantifies the change in customs value and the resulting duty and VAT effect. At minimum it should capture, for each affected bill of entry, the originally declared customs value, the revised customs value after the transfer-pricing adjustment, the difference between the two, the applicable rate of customs duty, the additional (or reduced) customs duty, and the additional (or reduced) import VAT.

A simplified worked example illustrates the mechanics. Assume an importer declared goods with a customs value of R10,000,000 across a year and a year-end upward transfer-pricing adjustment of 5% increases the true customs value to R10,500,000. The adjustment uplift is R500,000. If the customs duty rate on the goods is 10%, the additional customs duty is R50,000. Import VAT (at the standard rate, currently 15%, but importers should apply the rate in force) is then calculated on the uplift plus the additional duty, that is, on R550,000, producing additional import VAT of R82,500 at 15%. The total additional payable in this example is R132,500.

These figures are illustrative; the actual tariff and VAT rates in force at the time of entry must be applied.

Where the year-end adjustment is downward, the same arithmetic runs in reverse and may support a refund rather than a payment. The key discipline is consistency: the calculation must map line by line to the bill-of-entry data, apply the correct tariff rates in force at the time of entry, and show the import VAT base clearly. A well-structured workbook that lists each bill of entry as a row and carries the formulae across columns makes the calculation auditable and speeds SARS acceptance.

Payment timing and mechanics

Once a customs value adjustment shows additional duty or import VAT owing, payment should be made within the period SARS specifies for the relevant mechanism. Importers should confirm the applicable payment deadline with SARS, as late payment exposes the importer to interest and penalties under the Customs and Excise Act, and persistent non-compliance can attract wider enforcement action. The practical lesson is to have funds and sign-off ready before the calculation is submitted, so that acceptance does not catch the finance team unprepared within a potentially short payment window.

The environmental levy on electricity, what licensees must do

The environmental levy on electricity is a Customs and Excise levy administered by SARS, historically applied to electricity generated from non-renewable sources. The levy and its scope are reviewed periodically through the Budget process and given effect in the Customs and Excise Act schedules and the Government Gazette. Where the levy is amended, suspended or repealed, affected generators and manufacturing-warehouse licence holders must review both any refund entitlement and their ongoing licensing position. Because the precise status and effective dates of any change are set out in the relevant Gazette, licensees should verify the current position directly against the Government Gazette and SARS before acting.

Which entities are licensees and who is affected

The entities affected are those that are or were liable for the environmental levy on electricity they generate, principally generators operating under a manufacturing-warehouse licence for electricity, together with any licensee that accounted for the levy. If your business operates under such a licence and has accounted for the levy, you fall within the population that must monitor any change to the levy and act on any resulting refund opportunity or licensing requirement.

Refund eligibility and the claims process

Where a change to the levy gives rise to a refund entitlement, the refund is claimed through the SARS process that gives effect to the relevant Gazette, supported by documentation evidencing the levy paid. In practice, licensees should assemble the levy returns and payment records covering the relevant period, reconcile the total levy paid, and submit a refund claim aligned to that figure.

A simple illustration: if a licensee accounted for and paid environmental levy of R200,000 across a period in respect of which a refund becomes available, the refund claim would be built on that R200,000, supported by the underlying levy returns and proof of payment for each period. As with any Customs and Excise refund, accuracy and complete documentation determine whether the claim is processed without query. Keep the supporting records organised by period so the claimed amount reconciles cleanly to the payment history. Note that Customs and Excise refunds are generally subject to prescribed time limits for lodgement, so claims should be made promptly.

Licence considerations

Where a levy change removes the need for a manufacturing-warehouse licence that supported the levy accounting, affected licence holders should consider whether to apply to cancel it. Any cancellation is applied for through SARS. Licensees should prepare a cancellation application alongside any refund claim so the two are dealt with as a coherent package, and should confirm that no residual levy liability remains outstanding before the licence is cancelled.

Interaction with other duties and taxes

A refund of a levy previously expensed may have knock-on tax consequences. It may need to be reflected in the licensee’s accounting and could affect the income-tax position for the relevant year, and the VAT treatment of the levy and any associated inputs should be reviewed. Licensees should coordinate any customs refund with their income-tax and VAT teams so that the refund is correctly recognised and no inconsistency arises between the customs recovery and the entity’s broader tax filings.

Diesel-refund registration

The diesel-refund scheme allows qualifying users in eligible sectors (such as farming, forestry, fishing and mining) to claim a refund of a portion of fuel levies on eligible diesel use. Historically, diesel-refund administration has operated via the VAT system, with refunds claimed on the VAT return. SARS has indicated that the diesel-refund system is being reformed, including moves toward a standalone diesel-refund administration separate from VAT. Because the commencement and registration requirements of any such reform are set by SARS and may be phased, affected businesses should confirm the current registration requirements directly with SARS.

Scope, users, sellers and intermediaries

Any registration or re-registration requirement is likely to reach the full chain that interacts with the diesel-refund system. Diesel-refund users, the enterprises that consume eligible diesel and claim refunds, are directly affected. Diesel sellers who operate within the refund framework, and intermediaries whose role depends on existing registrations, should also confirm their position. If any part of your business currently claims or facilitates diesel refunds, verify your registration status rather than relying on a historical registration.

Registration process and documentation

Registration is completed through SARS. The step-by-step approach is to first confirm whether your enterprise is currently registered for diesel refunds, then prepare the information SARS requires, and then submit any registration or re-registration so that eligibility continues without a gap. Businesses should gather the registration particulars, the activity and usage information that supports diesel-refund entitlement, and the records that evidence eligible use. Completing any required registration promptly is the single most effective way to avoid an interruption in refund entitlement.

Practical risks and mitigation

The principal risk is cashflow. For diesel-intensive operations, refunds are a material and recurring recovery; an interruption while registration is pending can create a real funding gap, and failure to register correctly can result in loss of refund eligibility. The mitigation is sequencing and speed: treat registration as an urgent, time-boxed task, assign a named owner, complete it before the next refund cycle, and keep evidence of submission. Where any uncertainty exists about whether a particular entity or activity still qualifies, resolve it as part of the registration process rather than discovering a problem when a refund claim is rejected. Robust logbooks and usage records remain essential, as diesel-refund claims are a frequent focus of SARS audits.

Cross-cutting compliance checklist and timelines

The table below consolidates the three areas so that affected businesses can see, at a glance, who must act, the required steps, the relevant considerations, the exposure for non-compliance and the cross-border dimension of each.

Use the following prioritised checklist to drive action:

1. Identify which of the three areas apply to each entity in your South African structure.
2. For importers, map all related-party imports and flag any year-end transfer-pricing adjustments requiring reconciliation.
3. Request the relevant bill-of-entry data from SARS for affected imports.
4. Build the customs value adjustment calculation and ensure funds are ready for the payment window.
5. For electricity licensees, assemble levy payment records and prepare any refund claim.
6. Lodge any manufacturing-warehouse licence cancellation application alongside a refund claim where appropriate.
7. Confirm and complete diesel-refund registration before the next refund cycle.
8. Document every submission and set a diary for SARS responses and payment deadlines.

Cross-border and transfer-pricing implications for multinational groups

For multinational groups, customs value treatment creates a reconciliation obligation that spans jurisdictions. A year-end transfer-pricing adjustment agreed at group level, for example, a true-up booked by an overseas parent to align a South African subsidiary’s margins with an arm’s-length target, can have a direct customs consequence in South Africa whenever it moves the price of goods that were imported. The adjustment that satisfies income-tax transfer-pricing rules must also be carried through to the customs value.

The principal risk is misalignment between the group’s direct-tax transfer-pricing position and its customs declarations. An example flow illustrates the exposure: the group finance team agrees a 4% upward true-up for the year; the income-tax return reflects the higher cost of goods; but if the customs team never reconciles the adjustment with SARS, the declared customs values remain understated and additional duty and import VAT may go unpaid. To avoid this, groups should connect their transfer-pricing and customs functions, ensure that any year-end adjustment affecting imported goods automatically triggers a South African customs review, and retain consistent documentation so that the customs adjustment and the transfer-pricing adjustment tell the same story.

Coordinated internal controls are the best defence against both double-counting and under-declaration.

Practical next steps and recommended playbook

CFOs, tax teams and customs brokers should move on a defined timeline. The following playbook sets out who to involve and what to prepare.

1. Within 7 days, convene finance, tax and customs leads to confirm which areas affect each entity.
2. Within 7 days, confirm diesel-refund registration status with SARS and begin any registration where required.
3. Within 7 days, identify any outstanding year-end transfer-pricing adjustments that affect imported goods.
4. Within 30 days, request and reconcile bill-of-entry data from SARS for affected imports.
5. Within 30 days, prepare the customs value adjustment calculation and ring-fence funds for the payment window.
6. Within 30 days, assemble any relevant electricity levy records and prepare any refund claim and licensing application.
7. Instruct external advisors on any fact-specific customs, VAT or transfer-pricing questions before filing.
8. Establish a standing control so future transfer-pricing true-ups automatically trigger a customs review.

Sources, downloads and further reading

The analysis above draws on the Customs and Excise Act, 1964, SARS guidance and the Government Gazette. Because effective dates, thresholds and procedures are updated periodically, businesses affected by these changes should consult the official documents directly and seek tailored advice via the Commercial Transactions, South Africa practice area, or use the directory to find a Commercial Transactions lawyer in South Africa.

Key takeaways and conclusion

Customs value, electricity levy and diesel-refund compliance all demand coordinated action from importers, electricity licensees and diesel-refund users alike. The essentials are:

• Importers with related-party transactions should reconcile year-end transfer-pricing adjustments with SARS and settle any additional duty and import VAT within the period SARS specifies.
• Manufacturing-warehouse licence holders should monitor any change to the electricity environmental levy, claim refunds where entitled, and review their licensing position in line with the relevant Gazette.
• Diesel-refund users and sellers should confirm their registration status with SARS and register as required to retain eligibility.
• Multinational groups should connect transfer-pricing and customs functions now to prevent under-declaration and double counting.

These are live compliance areas with cross-border reach. Because the detailed effective dates and figures are revised periodically, businesses should verify the current position against the official sources below, act on the prioritised checklist, and obtain tailored advice on any fact-specific position through the Commercial Transactions practice area for South Africa.

Sources

1. South African Revenue Service (SARS)
2. Government of South Africa, Government Gazettes
3. SAFLII, Customs and Excise Act, 1964 (consolidated text)
4. SARS Customs and Excise
5. National Treasury South Africa