Post: Understanding the South African diesel rebate scheme: A lifeline for the forestry sector

June 30, 2025

Understanding the South African diesel rebate scheme: A lifeline for the forestry sector

The South African Diesel Rebate Scheme is a vital tax relief programme designed to support various industries, including agriculture, mining and forestry.

By offering refunds on diesel fuel costs, the scheme aims to alleviate the financial pressures faced by local industries competing in the international marketplace. This initiative plays a crucial role in enhancing the competitiveness of these sectors, especially given the rising operational costs associated with fuel.

OVERVIEW OF THE DIESEL REBATE SCHEME
Currently administered through the VAT system under the Customs and Excise Act, the diesel rebate scheme provides partial or full relief from the General Fuel Levy and the Road Accident Fund Levy for VAT-registered companies. In the Forestry Sector specifically, businesses can claim a rebate on 80% of their diesel usage, provided it is used for qualified primary forestry activities. This exclusion does not extend to personal or private consumption, ensuring that the benefits are directed towards productive industry activities.

RECENT DEVELOPMENTS AND INDUSTRY INPUT
The South African Revenue Service (SARS) is currently reviewing the diesel rebate scheme and has sought input from industry stakeholders. FSA has actively engaged in this process, making detailed submissions to advocate for the inclusion of additional forestry-specific activities in the rebate scheme. Key areas of focus include claiming rebates for empty mill return trips and the transportation of wattle bark, both of which are essential to forestry operations.

In addition to these requests, FSA is lobbying for the inclusion of labour transport costs associated with transporting workers to and from their workplaces. This additional relief would further ease the financial burden on forestry companies and enhance their operational efficiency.

UPCOMING SECTOR CONSULTATIONS
SARS plans to conduct sector-specific consultations beginning in May, where stakeholders will have the opportunity to discuss their needs and concerns regarding the diesel rebate scheme. FSA is poised to push for the inclusion of labour transport diesel costs during these consultations, drawing on the positive feedback received from SARS regarding the importance of this issue.

THE NEW DIESEL REBATE SYSTEM – A HUGE WIN FOR THE FORESTRY SECTOR
FSA members should note the introduction of the new diesel rebate scheme for forestry, a significant achievement that FSA successfully negotiated. Set to take effect from April 2026, this revamped scheme will be decoupled from the VAT system, streamlining the process for companies to claim their rebates.

It is important we highlight the instrumental role of the National Logistics Crisis Committee, especially the value of Ian Bird, Marc Descoins and David Taylor in advancing these discussions and securing positive outcomes on behalf of the Forestry Sector.

Source: Forestry in Focus (Page 20 – 21)