SARS spells out sugar tax for beverage firms

Eastern Cape-based beverage manufacturers like Coca-Cola, Twizza and Woodlands Dairy will be among the producers that will have to be licensed and registered to produce beverages containing sugar.

This emerged at a beverage industry stakeholders’ engagement at the Port Elizabeth office of SARS, where the revenue service laid out the requirements and administration processes required to comply with the new sugar tax.

The tax, which SARS calls a health promotion levy, becomes effective on April 1.

While there is no cost to be licensed and registered as a manufacturer of beverages with sugar content, it is a requirement which will give SARS a means of applying punitive measures to manufacturers in the event of a tax or other default.

Beverage producers will have their plants and warehouses inspected as part of the new tax regime.

SARS official Andre Joubert, who is from its governance division (excise policy and procedure), told about 20 producers and industry representatives at the session that enabling legislation had now been drafted.

He said SARS’s enforcement of the tax and its levy collection was based on its duty at source (DAS) policy.

The new legislation puts manufacturers into two distinct categories: those that produce beverages using more than 500kg a year and those using less than 500kg a year.

These two groups were described as commercial and non-commercial with different levy requirements.

The minimum threshold – at which the levy becomes applicable to a beverage – is more than four grams of sugar to 100 millilitres liquid.

Among SARS’s requirements for enforcing the levy is that producers will be required each year to declare the volume of sugar they intended to use to make beverages.

Joubert also noted another requirement of the new levy, that manufacturers perform a stock-take, as sugarbased beverages produced before April 1 would be exempt from the levy – which would apply to all beverages with sugar content produced from April 1.

Under certain circumstances, the law provides for refunds and rebates.

Questions from manufacturers during the session largely revolved around beverage pack volumes and the tax-related administrative complexities arising from extensive product ranges and beverage flavours.

The time it took to put beverages through the compulsory tests for sugar content was also an issue.

Concerns were raised that delays in the testing process would hinder the ability to administer the beverages so as to comply with the new legislation.

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