SUGAR TAX (HEALTH PROMOTION LEVY) IN SOUTH AFRICA

SUGAR TAX (HEALTH PROMOTION LEVY) REGISTRATION REQUIREMENTS WITH SARS

Compliance with South Africa's Health Promotion Levy (HPL) - commonly known as the Sugar Tax - is a critical regulatory requirement for all businesses manufacturing or supplying beverages and beverage premixes containing sugar. Administered by the South African Revenue Service (SARS), this levy carries mandatory registration and licensing obligations that directly impact producers, blenders, and suppliers operating within the beverage industry.

What is the Sugar Tax (Health Promotion Levy)?
The Health Promotion Levy (HPL) on sugary beverages is a mandatory excise levy imposed under Chapter VB of the Customs and Excise Act No. 91 of 1964 for the production or importation of sugary beverages in South Africa. It is calculated on the sugar content of the product above a threshold of 4g per 100ml.

Key Compliance Requirements
1. Registration and Licensing with SARS
* All entities that manufacture, import, or otherwise deal with products that are subject to the Sugar Tax must register with SARS Excise before production or importation begins.
* Commercial manufacturers (those producing sugary beverages with total annual sugar content exceeding 500kg) must register and obtain a manufacturing license with SARS Excise.
* Non-commercial manufacturers must register with SARS, even if they do not meet the commercial threshold and are not liable to pay the levy.
This requirement applies regardless of product format - including premix blends (powder or liquid concentrates containing sugar), even if the customer or manufacturer only adds water to the blend to prepare beverage. SARS considers the total sugar content of the prepared beverage for levy purposes, and sugar content for powder or liquid concentrates is calculated on the total volume when prepared.
Important: Customers who source premixes from Dynamiko Food Ingredients - and resell or prepare beverages using these premixes in South Africa - must also register and be licensed as required. SARS enforcement expects documented proof of registration or licensing - failure to comply can result in factory or manufacturing closure and penalties.

2. Licensing Premises
* The physical manufacturing or blending premises must be licensed as a customs and excise manufacturing warehouse (VM).
* For each such warehouse where HPL-liable products are prepared, a separate license / warehouse number is required unless otherwise approved by SARS.

3. eFiling Registration
* Once registered / licensed, all HPL returns and payments must be submitted electronically via SARS eFiling.

Rules & Definitions
* The levy applies to all goods listed under Section A of Part 7 of Schedule No.1 of the Customs and Excise Act that are manufactured in or imported into South Africa.
* Sugar content includes both intrinsic and added sugars and other sweetening matter.
* In the absence of a recognised laboratory test report, a deemed sugar content of 20g per 100ml is assumed for calculation purposes.

Consequences of Non-Compliance
SARS Customs has clear enforcement protocols and may require proof of registration or licensing on inspection. Failure to produce valid SARS registration / license documentation may lead to:
* Suspension of manufacturing operations,
* Seizure of goods,
* Penalties and interest for late or non-filing,
* Possible closure of manufacturing premises.

Where to Register & Get More Information
* Visit the SARS website: https://www.sars.gov.za
* Sugar Tax (HPL) Information Page: SARS - Health Promotion Levy on Sugary Beverages.
* Contact SARS Excise Branch Office or call the SARS Contact Centre (0800 00 7277) for assistance.

It's strongly recommended that you verify your registration status with SARS immediately if your products or premixes contain sugar. If you are unsure whether you qualify as a 'commercial manufacturer', seek professional tax advice or contact SARS directly.

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