Diesel Levy Drops to Zero: Key Refund Changes for Businesses

The Diesel Levy Drop: Navigating Temporary Relief and Refund Recalibrations

South African businesses operating in transport, agriculture, and mining have recently received a significant, albeit temporary, reprieve at the fuel pump. Following a series of government gazettes issued under the Customs and Excise Act, the general fuel levy on diesel has been slashed to zero. While this provides immediate cash flow relief for fleet operators, it simultaneously introduces a complex shift in how diesel refunds are calculated and claimed.

For business owners and directors, this is not merely a “set and forget” price drop. It represents a fundamental change in the tax structure of fuel that requires immediate attention to accounting systems and financial forecasting. Understanding the mechanics of this change is essential to avoid compliance errors and to ensure that your business remains prepared for the inevitable return of the levy in the coming months.

Why This Matters to Your Business

The removal of the 93c per litre general fuel levy on diesel directly impacts the bottom line of any business with a heavy reliance on logistics or machinery. However, the “win” at the pump is offset by a reduction in the refundable amounts available to primary producers. Because the refund scheme is designed to pay back a portion of the levies actually paid, the absence of a general fuel levy means there is less to claim back. Failing to adjust your internal calculations could lead to overstating your refund claims, which may result in penalties or interest during a SARS audit.

Key Business Implications

• Immediate Pump Price Reduction: As of early May 2026, the cost of diesel at the pump dropped by approximately 93c per litre. This provides an immediate liquidity boost for transport and logistics firms.
• Recalibrated Refund Rates: For businesses in farming, forestry, mining, and offshore operations, the diesel refund is now limited to the Road Accident Fund (RAF) portion, which stands at 225c per litre. The portion previously linked to the general fuel levy is now nil.
• No Change for Petrol: It is important to note that this relief does not extend to petrol. The general fuel levy on petrol remains at 110c per litre, plus the carbon fuel levy.
• Temporary Nature of Relief: This is a phased intervention. National Treasury has indicated that the levy will likely be reinstated at 50% in June 2026, with a full return to standard rates expected by July 2026.
• Carbon Levy Stability: The carbon fuel levy on diesel remains unchanged at 23c per litre, meaning environmental tax obligations continue as usual.

Compliance and Financial Risks

The primary risk for SMEs and large corporations alike lies in “accounting inertia.

Source: Diesel Levy Drops to Zero. Diesel Refunds Recalibrated.