Schedule 1, Part 5 of the Schedules to the Customs and Excise Act addresses fuel and RAF levies. Schedule 1, Part 2A of the same Act pertains to specific excise duties on locally manufactured or imported goods of the same class or kind. The fuel levy, RAF levy and excise duty in cents per litre, charged on petrol and diesel, are outlined in Table 2.

Table 3 provides the context for the effect of combined fuel taxes as a percentage of the pump price. Three time periods are covered: 2023/2024, 2024/2025, and 2025/2026 (the budget periods as defined by the South African National Treasury), as indicated in the Table 3.

According to the 2025 budget, the estimated revenue outcome of the fuel levy for SARS’s financial year ending 31 March 2025 amounts to R83 104 million (National Treasury 2025).

Environmental levies are specified in Schedule 1, Part 3 of the Schedules to the Customs and Excise Act. Part 3D specifically addresses a levy on CO₂ emissions from ICE vehicles. Table 4 includes the environmental levy rates for specific ICE vehicles.

Under the Customs and Excise Act, customs duties are levied on imported goods. The Schedules to the Customs and Excise Act Part 1 include various percentage duty rates applied to goods traded under different trade agreements and economic blocs. The six agreements included are the General Agreement, the EU/UK, the European Free Trade Association (EFTA), the Southern African Development Community (SADC), the Southern Common Market (MERCOSUR) and the African Continental Free Trade Area (AfCFTA). Schedule 1, Part 1, Chapter 87 addresses the duties on the import of vehicles, their parts and accessories. Table 5 presents the percentage import duty rates applicable to selected ICE vehicles and EVs, as classified under Schedule 1 of the Customs and Excise Act. The ICE vehicles included in the comparison represent popular categories currently in widespread use in South Africa, such as mid-sized passenger cars and delivery vehicles. These categories were chosen to reflect the most relevant vehicle types for consumers and businesses that are transitioning to electric alternatives. Electric vehicle counterparts were selected based on their equivalent classification by usage and gross vehicle mass (GVM).

For mid-sized passenger cars, the import duty rate is the same under four of the trade agreements. Under the EU/UK trade agreement, the import duty for ICE vehicles is 18%, compared to 25% for EVs. This 7% difference in import duties is highlighted by various authors (Bharadwaj 2023; Cokayne 2023; Labuschagne 2025; Planting 2022; Tongwane & Moeletsi 2021) and is regarded as a key market barrier (GreenCape 2023; Labuschagne 2025; Mateko 2024). For delivery vehicles, the duties on the import of ICE vehicles and EVs are the same.

In terms of Section 7(1)(b) of the VAT Act, No. 89 of 1991, VAT is levied on the importation of goods into South Africa. Section 13(2)(a) stipulates that VAT is payable on imported goods³ at 15% of the total customs duty value (which may differ from the actual purchase price), plus 10% of the customs duty value, plus any non-rebated customs duty payable and any import surcharges. If the importer is a VAT vendor and the imported goods are to be used or supplied in the course of making taxable supplies, the importer, not being the final consumer, will be able to claim the input VAT paid. The VAT paid on the importation of goods will therefore only result in a cost for the importer if that person is the final consumer. This is the case if the importer is a non-vendor or if they are a VAT vendor to the extent that the imported goods will not be used in the course or furtherance of their enterprise (Stiglingh et al. 2023). The VAT levied (i.e. the percentage) will be the same for ICE vehicles and EVs; however, because EVs generally have higher purchase prices than their ICE counterparts, the actual VAT amount payable on EVs will be correspondingly higher, which will result in a greater tax burden for consumers despite the uniform rate.

In Schedule 1 to the Customs and Excise Act, Part 3E, the environmental levy on tyres is R2.30 per kilogram net for all tyre types specified in this Schedule. This means the tax effect on ICE vehicles and EVs will be the same for this levy.

In terms of the Customs and Excise Act, Schedule 1, Part 2B, ad valorem tax is levied on locally manufactured goods and on imported goods of the same class or kind. Vehicles (including ICE vehicles and EVs) imported into South Africa are taxed using the following formula: the excise value (invoice price) multiplied by the duty rate. The rate of duty is calculated as a percentage (i.e. 0.00003 multiplied by the transaction value of imported goods plus 15%, plus any non-rebated customs duty payable minus 0.75 percentage points). The calculated percentage is capped at 30%. The ad valorem tax formula applies equally to both ICE vehicles and EVs; however, as with VAT, the typically higher purchase prices of EVs compared to their ICE counterparts result in a higher ad valorem tax liability. Consequently, consumers who purchase EVs will face a greater tax burden, even though the same tax formula is applied to both vehicle categories. From a tax perspective, there are tax savings from using EVs due to the absence of fuel-related taxes (including the fuel levy, RAF levy and excise duty) and the environmental levy on CO₂ emissions. However, the higher import duty (25% compared to 18%) when importing EVs under the EU/UK trade agreement needs to be considered. In addition, although the VAT rate and the ad valorem formula applied are the same for ICE vehicles and EVs, the actual tax payable on EVs will be higher because EVs generally have higher purchase prices. It should also be noted that EVs are indirectly affected by the electricity generation levy, which influences overall costs.

The participants identified several competing fiscal and policy considerations that would influence the National Treasury’s decision on whether to introduce new taxes or revise existing ones for EVs. On the one hand, South Africa’s membership of the G20 and its commitment to international environmental objectives create strong incentives to ‘go greener’, attract investment and support the economy (P8; P10). On the other hand, practical challenges, particularly the potential loss of revenue from fuel-related taxes, weigh heavily, as the National Treasury must ensure that the budget balances (P4; P8; P10). Consequently, the anticipated revenue loss from fuel-related taxes is a primary factor that drives the National Treasury’s consideration of additional taxes (P1; P4; P5; P6; P7; P8; P9; P10), thus making reliable data on such losses essential (P7). In assessing incentives, the National Treasury should also consider the success rates of similar measures in other countries (P7). The participants agreed that the National Treasury undertakes research before implementing significant tax or policy changes (P5; P7; P9). This research often includes international comparative studies; however, it is typically conducted at a high level, with limited transparency regarding the underlying data (P7). Regarding potential EV tax changes, the participants indicated that the National Treasury would likely adopt a similar research-driven approach (P5; P10). Nevertheless, EV taxation was not perceived as a current priority (P5; P6), given the National Treasury’s capacity constraints and focus on more pressing fiscal matters: ‘this is not their core focus at the moment’ (P5); ‘I don’t think it’s such a big topic … at the moment … I think they’ve got bigger fish to fry’ (P4); and ‘it’s going to take a very long time’ (P10). In addition, when the National Treasury does get around to conducting the research, ‘the source data is probably going to be in Europe … and the problem is we’re just simply not comparable to them’ (P7). The participants indicated that it is legally and administratively possible for the National Treasury to implement an alternative taxation model for EVs (P1; P2; P5; P7; P8; P9; P10), as reflected in the view that ‘if they’re going to try and enforce it [an additional tax], they’re going to enforce it’ (P1). However, considering practicality, the participants agreed that the administrative requirements and compliance costs would likely undermine its viability, as the revenue generated would not, for the foreseeable future, justify these costs (P2; P5; P7). P3 further noted that SARS currently lacks the resources to administer an additional tax and would therefore be likely to oppose such a measure unless ‘a significant amount of tax can be generated’. Overall, this theme reflects broad convergence among participants on the fiscal and administrative constraints that shape the National Treasury’s decision-making regarding potential EV taxation, despite competing policy objectives.

The National Treasury is likely to seek mechanisms to substitute declining fuel-related tax revenues (P1; P3; P4; P9; P10), with the participants reflecting on various possibilities. Most participants suggested introducing additional taxes on EV consumers (P1; P3; P5; P6; P7; P9; P10), while others proposed additional taxation on ICE vehicle consumers (P1; P4). P1 and P4 suggested alternative revenue-raising measures, including increasing the capital gains tax inclusion rate, donations tax and estate duty (targeting affluent individuals) (P1; P4), as well as potentially increasing the VAT rate (P4; P10). In contrast, P6 opposed broad-based tax increases, arguing that policymakers should ‘target the people where they lose funds and not tax the other already overtaxed people’, thereby expressing resistance to shifting the burden onto the general tax base. P8 expressed uncertainty about how the gap could be filled by stating: ‘How will they fill the gap? I really don’t know’. This theme reflects divergent perspectives among participants regarding appropriate mechanisms to address anticipated fuel-related revenue losses, and the participants’ suggestions regarding additional taxation on EV consumers and ICE vehicle users are therefore discussed separately to reflect these differing viewpoints. These sub-themes were prioritised due to their prominence in the data, while other isolated suggestions are incorporated within the broader discussion of this theme.

The participants indicated that the National Treasury may seek to offset declining fuel-related tax revenues by introducing additional taxes on EV consumers (e.g. an upfront levy at purchase, additional licence fees, a road usage charge or additional electricity-based levies) (P1; P3; P4; P5; P6; P7; P9; P10), particularly given the perception that EV owners in South Africa are generally higher-income earners (P1; P7). If an additional tax is introduced, it should be an indirect tax (e.g. included in the licence fee) (P7; P8), so that the public is largely unaware of paying it, as P8 noted: ‘It is almost a hidden tax’. P7 compared an upfront levy at purchase with annual additional licence fees, noting that consumers are more accepting of smaller, recurring charges than a large one-off payment. An annual licence fee also entails a lower administrative burden (P7; P8) and integrates more seamlessly into the existing system (P7). However, these fees would be collected provincially, whereas the National Treasury would likely want the revenue to flow into its coffers. Provincial collection may therefore be more practical for a road usage charge, given that the Western Cape is likely to have more EVs than Limpopo (P7). Electric vehicles are substantially heavier and may contribute disproportionately to road damage, which potentially justifies the introduction of higher licence fees or a toll on EVs to recover infrastructure costs (P2; P4). However, P4, P5, and P8 highlighted practical challenges in implementing such tolls. P5 suggested that toll gates may not be effective because the widespread road network would require adding more toll gates and dedicated lanes, and recommended that an alternative method of taxing EVs should be considered. P2 suggested that any additional EV taxation would likely be ideologically motivated rather than practically justified. P2 further characterised such measures as unrealistic, questioning their administrative feasibility and arguing that SARS may lack the capacity to implement them effectively. P5 and P10 argued that imposing additional taxes on EVs is counterproductive, as the National Treasury is meant to encourage uptake to make South Africa greener. P5 explained:

P5 described it as ‘a bit of a Catch-22; you want to incentivise this, but you don’t want to … lose the tax’. P2 also questioned whether EV adoption would result in a significant fiscal loss and argued that increased electricity consumption would generate additional VAT revenue and that any perceived shortfall may be overstated. P1 stated that environmentally motivated consumers may be willing to incur higher costs to align with their environmental values. P10, however, disagreed by stating that:

P8 and P10, sharing P5’s sentiment, emphasised that policymakers must balance taxation so it does not discourage adoption.

P10 argued that the National Treasury should not tax EVs and stated that this ‘would go against the whole aim of trying to reduce our carbon footprint’, and instead suggested that additional taxation should target ICE vehicle users, where higher CO₂ emissions originate. While this approach aligns with the objective of promoting greener behaviour, P7 questioned its practical feasibility in the South African context and cited a disconnect between international policy ambitions and domestic implementation realities. Furthermore, the participants cautioned that such measures would increase public transport costs, particularly taxi fares, which would disproportionately affect lower-income communities who rely on these services (P1; P2; P4; P6; P7; P8; P10). P10 noted that higher fuel levies would affect the broader transport sector, including road freight, likely leading to higher food prices and the overall cost of living. In the South African context, where the poorer majority constitutes a significant voter base, the participants predicted strong pushback and a heightened risk of social unrest, especially if policy reforms are perceived as redistributive in reverse and burden those who cannot afford to transition to EVs, including taxi operators (P1; P2; P4; P6; P7; P8; P10). As P1 explained, you cannot necessarily just penalise petrol usage if you still have 80% of the population using taxis, etc., to give something to someone who wants to drive a nice car and feel better about themselves because it is an environmentally friendly car. A possible solution is the provision of alternative public transport, such as reliable rail services, to mitigate the impact of increased fuel taxes on taxi-dependent commuters (P1). It is reasonable to conclude that using increased fuel-related taxation to offset anticipated revenue losses may not be the most viable route for the National Treasury, given the social, economic and practical constraints in the South African context (P1; P2; P4; P6; P7; P8; P10).

P5 indicated that the National Treasury has demonstrated a willingness to respond to technological or industry shifts through targeted tax incentives. P3, P5 and P8 referred to incentives introduced in the renewable energy sector, including a limited rebate for individual taxpayers installing rooftop solar panels and more extensive incentives for businesses, such as accelerated wear-and-tear allowances for renewable energy assets (P5). The participants explained that the uptake of tax incentives is minimal (P7; P8) due to onerous compliance requirements and administrative burdens (P6; P7; P10). They noted that it is ‘near impossible’ to provide SARS with the required supporting documentation (P10), with compliance costs often outweighing the tax benefits obtained (P7). P7 further highlighted a disconnect between the National Treasury’s policy intentions when designing incentives and the manner in which SARS applies them in practice, which results in incentives failing to achieve their intended objectives. As a result, incentives were viewed as ineffective, with some participants suggesting that the complexity of the system may discourage participation altogether (P6; P7; P10). P7 suggested that this complexity may be deliberate, with the effect of discouraging participation. The participants highlighted several considerations regarding the potential for SARS and the National Treasury to provide incentives for EV adoption. The latter is not particularly motivated by environmental objectives (P2; P4; P5; P6; P7; P8), with P2 noting that ‘the only time when they want to keep things green is when they want money from the EU; otherwise, it’s not really of consequence’. According to P5:

P10 agreed by stating that the cost of going green is just too high. If the National Treasury decides to provide an incentive and effectively forgo some revenue, the revenue will likely be made up elsewhere (P1). Incentives could take several forms, including credits or rebates (P1; P3; P6) or accelerated wear-and-tear deductions (P1; P3; P4). Incentives may be calculated as a percentage of the vehicle cost or based on the carbon emissions saved (P3). Other mechanisms to promote EV adoption include reducing import taxes and VAT (P2; P4; P9). Additional strategies include incentivising EV rentals rather than purchases, which will allow consumers access at a lower cost while generating revenue for SARS through VAT and lessor income (P3). The participants also discussed carbon credit incentives, whereby EV owners could sell carbon credits to companies that pay a carbon tax, creating a financial benefit for the EV owner even after taxation (P3). Most incentives are prone to abuse or misuse (P5) and therefore include a sunset clause (P3; P5; P7), which means that any incentive for EVs is likely to be short-term in nature (P6). P5 also noted that the economy and fiscus cannot currently afford long-term incentives. Providing incentives to adopt EVs will also encounter ‘pushback from your oil industry … because they will try and push people not to take up these vehicles’ (P4). The National Treasury’s willingness to provide incentives is contingent on the potential to generate additional revenue (P3; P5; P8), such as income tax, VAT or import duties from EV sales (P3). If implemented effectively, these incentives could increase demand, stimulate local manufacturing, create employment and expand the tax base (P3; P9), resulting in a potential ‘win-win scenario’ (P3). Given the higher cost of EVs compared to ICE vehicles, the participants suggested that incentives must be significant enough to make switching attractive to consumers (P2; P3; P8; P10). P3 and P5 also emphasised that incentives typically involve substantial administrative and compliance requirements, which may further discourage uptake. At this stage, considerable uncertainty remains regarding the design and implementation of any incentive, including how it would be structured, calculated and administered (P3). Currently, there is no incentive as the National Treasury might not be seeking to encourage EV adoption (P4; P6; P7). As P8 observed, ‘Incentivising you to use a vehicle that reduces [their] revenue [collection] is quite unlikely’. This view reinforces Bharadwaj’s (2023) argument that, given South Africa’s developmental and fiscal constraints, providing consumer-side tax incentives for EV adoption may not constitute a realistic policy option. The participants reflected on the government’s current strategy of focusing on EV production and providing manufacturing incentives (P1; P2; P3; P5; P7; P9). Incentivising production makes economic sense, as it creates jobs and attracts foreign direct investment in South Africa, rather than primarily benefitting affluent EV buyers (P1; P3; P5; P7; P9). This approach may also indirectly promote consumer adoption, because higher local supply could reduce prices and make EVs more affordable (P3; P5). P5 contended that the National Treasury should not view the anticipated decline in fuel-related tax revenue in isolation, as manufacturing incentives may broaden the overall tax base by stimulating economic growth and employment, and ultimately generating additional tax revenue that could offset or even exceed the shortfall from reduced fuel levies (P5). This theme reflects limited but conditional support for EV-related tax incentives, constrained by fiscal pressures, administrative complexity and competing policy priorities in the South African context.

The participants were asked to comment on whether logistics companies should rely on the current tax treatment of EVs when making fleet replacement decisions. In particular, the question explored whether a company that concludes, based on existing tax incentives and perceived tax savings, that transitioning to EVs is economically viable should proceed or whether such decisions should be approached cautiously due to the possibility of future legislative or policy changes. The participants indicated that they did not expect a change in tax policy in the near future (P1; P2; P4; P5; P6; P7; P8; P9): ‘There is nothing in the short term that we’ve seen from discussions by Treasury stating that there are either incentives or taxes on the way’ (P5). They therefore advised that logistics companies could proceed with fleet replacement decisions where the transition to EVs is currently economically justified (P1; P2; P4; P5; P6; P7; P8; P9). P1 explained:

The participants further noted that logistics companies could reassess their fleet composition should additional taxes be introduced in the future (P1; P3). This view was informed by the relatively short useful life of transport vehicles, typically estimated at between 3 years and 5 years, which the participants felt allowed for a degree of flexibility in responding to future policy changes (P1; P3; P10). P4 summarised:

P5 added that it could go either way and that if they ‘go incentive … then you’re ahead of the curve’.

The participants generally did not anticipate large-scale EV adoption in South Africa in the short term and consequently viewed any potential short-term loss of fuel-related tax revenue as minimal and overstated (P2 to P10) (‘the revenue loss is going to be minimal’ [P7]). The National Treasury should focus on existing structural challenges in the tax system, such as compliance and tax evasion, rather than speculative revenue loss from fuel-related taxes (P7). Low EV adoption in South Africa is attributed to high costs that incentives alone are unlikely to overcome, particularly in a country with significant income inequality (P1 to P10). Limited electricity supply and ongoing power shortages further constrain adoption, as households and businesses may not have reliable access to the energy needed to charge EVs (P1; P6; P8) (aligning with Laurence 2023). Another contributing factor is the long distances between towns in South Africa and the time required to charge an EV (P2; P3; P8). P2 elaborated: ‘[I]n a country … where there is fair distances between towns, I don’t think it is realistic that the take-up on EVs would be significant’. P2 also remarked:

P5 similarly noted that many households will likely maintain one EV alongside a conventional vehicle for longer trips. In addition, current infrastructure does not provide sufficient charging stations to support widespread EV adoption (P3; P4; P5; P8; P10), and even when more stations are built, they will probably be stolen (P4; P10). In the South African context, increased EV use may not reduce emissions as intended, because limited electricity generation capacity and poorly maintained power plants mean that additional demand is likely to be met by burning more coal and diesel, which undermines the environmental benefits of EV adoption (P6; P8). Overall, this theme reflects the consensus that structural constraints in South Africa are likely to limit short-term EV adoption and fiscal impact.