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South Africa Consults On Sugar Tax Proposals

by Lorys Charalambous, Tax-News.com, Cyprus

12 July 2016


On July 8, South Africa's National Treasury published for public comment its sugar tax proposals, which were originally disclosed by Minister of Finance Pravin Gordhan in February during his 2016-17 Budget.

The proposed tax on sugar-sweetened beverages (SSBs), which would be effective from April 1, 2017, is intended to help reduce excessive sugar intake in South Africa.

Among the measures available, a tax on foods high in sugar is seen as a very cost-effective strategy to address diet-related diseases. The National Treasury noted that countries such as Finland, France, Hungary, Ireland, Mexico, Mauritius, and Norway have all levied taxes on SSBs whereas other countries such the United Kingdom, Thailand, and Australia have recently announced their intention to introduce such taxes as part of a package of measures to help deal with the excessive intake of added sugars.

As it has been suggested that a 20 percent price increase for SSBs may be required to have a significant impact on their purchase and consumption, it is proposed that the South African sugar tax will be imposed at a tax rate per gram of sugar that approximately equates to a 20 percent tax incidence for the most popular soft drink (i.e. Coca Cola).

Like the other excise duties and product specific levies in South Africa, the proposed tax on SSBs will be implemented through the Customs and Excise Act. An additional category for SSBs will have to be created under the Schedules to the Act. The general principle for excise duty payment (i.e. duty-at-source) will be applied for ease of administration of the new tax.

Written comments on the proposals are requested by the close of business on August 22, 2016.

TAGS: individuals | South Africa | Finance | tax | business | law | excise duty | food | ministry of finance | legislation | tax rates | Africa

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