The National Budget Speech delivered by the Minister of Finance, Enoch Godongwana, was well received by financial markets. From a customs and excise perspective, it had no surprises in store for importers, exporters and manufacturers of excisable goods. The usual suspects, i.e. sin taxes, were increased in line with inflation.

Specific mention was made in the Budget of the upward revision of gross tax revenue for the 2025/2026 period, driven by increased focus on tax compliance and collections. It would seem the South African Revenue Service’s investments in artificial intelligence and aggressive collections underlie the positive collection figures, signalling a clear intent of SARS to persist with the current formula going forward

For taxpayers involved in imports, exports and excisable goods, it is a given that SARS will further increase and strengthen its focus on compliance and collections, and to fully utilise the wide-ranging powers still afforded to SARS officials under the current Customs and Excise Act No 91 of 1964 (“the Act”).

Although the “sin taxes” (excise duties on alcohol and tobacco products and fuel levy products) increased in line with inflation, surprisingly no mention was made on the status of the Health Promotion Levy (“HPL”), or the customs and excise specific voluntary disclosure program (“VDP”).  Moreover, one would also have expected an update on the status of the Customs Duty Act and Customs Control Act, which is already promulgated but not yet in force.

Given the extensive advocacy of both the Health Industry and the Sugar Industry on the status of the HPL, no reference was made thereto in the Budget, and the rate is yet to be increased. However, based on experiences of the past year, SARS has definitely and aggressively increased its focus on the sugar industry.

Importantly, reference was made to the discretion afforded to the Commissioner to exempt or condone non-compliance with the provisions of Section 75(10) of the Act where taxpayers fail to meet all the requirements prescribed by the rules and notes to Schedule 3, 4 and 6 of the Act. Going forward, it appears the intent would be to provide specific criteria for the exercise of such discretions, and a redraft of the current section was proposed.

Given the above, it is clear that taxpayers can expect increased activity in SARS investigations and audits.  From a customs and excise perspective, the Budget could be best described as possibly “the calm before the storm”.