An important change to the Diesel Refund Scheme will affect primary sector claimants operating onland in the farming, forestry, and mining sectors. From 1 April 2026, qualifying claimants will be able to claim a refund on 100% of eligible diesel used in qualifying activities, increasing the current entitlement from 80% to 100%.
The adjustment was announced by the Minister of Finance during the 2025 Budget Speech, with the objective of better aligning the Diesel Refund Scheme with its original policy intent of supporting primary sector production.
The Customs and Excise Act No. 91 of 1964 (“the Customs Act”) currently allows qualifying diesel users in the farming, forestry, and mining sectors to claim refunds on 80% of eligible diesel purchases and usage. As a result of the announcement, the Act will be amended to allow eligible claimants to claim refunds on 100% of eligible diesel purchases and usage.
To ensure a smooth transition, the implementation of the new rate will occur as follows:
- The 100% refund rate will apply from the April 2026 return period.
- The updated rate will appear on the SARS system from May 2026, which is the calendar month in which the April 2026 VAT return must be submitted.
- As VAT returns are generally due by the 25th day of the following month, or the last business day for eFiling, claimants will not be disadvantaged by the timing of the system update.
BDO South Africa recommends that eligible claimants take the following steps to prepare for the change:
- Review diesel usage records from April 2026 to ensure all eligible onland consumption is accurately captured for the first return under the new rate.
- Confirm VAT registration and diesel claimant status reflect qualifying activities in farming, forestry, or mining.
- Update internal systems and refund calculations to reflect the 100% refund rate from the April 2026 period.
“This adjustment increases the current diesel refund entitlement from 80% to 100% for qualifying onland activities in the primary sector, ensuring that the scheme better supports farming, forestry, and mining operations as originally intended,” concludes Marcus Stelloh, Head of Transfer Pricing, BDO South Africa.
