Tax Revenue
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SA ECONOMY

Tax Revenue

In 2022, the OEM Customs Account reflects that the seven OEMs paid R14,689 billion in taxes and duties to the Fiscus. These consisted of the ad valorem tax, CO2 tax tyre levies and a portion of the import duty on vehicles and original equipment components. This amount excluded VAT and taxes paid by the independent vehicle importers.

There is a set tariff regime on vehicles and automotive components imported into South Africa. Import duties on vehicles and automotive components are set at 25% on light vehicles and 20% on original equipment components. A preferential agreement results in imported vehicles from the EU paying only 18% duty.

The import duty on medium and heavy commercial vehicles is set at 20% ad valorem. A preferential agreement results in imported vehicles from the EU paying only 12% duty. Assembly operations of trucks and buses receive the benefit of the duty-free importation of all driveline components, which include the engines, transmissions, drive-axles and gearboxes. However, tyres, which are manufactured domestically, attract a 15% import duty.

Even though these duties could be rebated to zero, some OEMs still pay import duties under the existing Automotive Production Development Programme Phase (APDP2). This could mean that another 5% to 10% could be given through to the consumer in the price of the vehicle. The VAT is set at a standard rate of 15% in South Africa.

Ad valorem tax, essentially a luxury excise tax that exponentially increases with the price of the vehicle and is calculated according to a formula: {(0.00003 x A) – 0.75}%. In this formula “A” means the recommended retail price, exclusive of value-added tax, less 20%. If a vehicle with the recommended retail selling price of R900 000 is taken, using the above formula, the effective tax rate comes to 17.826%. If a vehicle with a recommended retail selling price of R200 000 is taken the effective rate is closer to 3%.

CO² emissions tax levied from 2010 which is on average about 2% to 3% and is directly payable by the manufacturer to the South African Revenue Service. This tax is also recovered through the selling price to dealers and consumers. The CO2 emissions tax on passenger cars effective from 6 April 2022 is R132 g/km R132/gCO2/km > 95g/ CO2/km while the tax on double cabs is R176/gCO2/km.

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