The South African Revenue Service (SARS) has amended the Regulations under sections 21, 60 and 120 of the Customs and Excise Tax Act 1964, effective from 30 November 2024. The revised rule would allow for the resumption of offshore refueling operations, particularly in Algoa Bay, more than a year after the shutdown. The new rule has been welcomed by shipowners who want to refuel when passing through South Africa as most of the ship traffic that used to pass through the Suez Canal has been forced to divert and pass through South African waters by attacks by Houthi rebels.

Previously, offshore refueling operations in Algoa Bay in September 2023 had to be closed due to SARS’s import duties and VAT on fuel supplied to foreign-flagged vessels passing through the country’s coast. VAT can be refunded if there is evidence that the fuel has been re-exported, but delays in the refund procedure have affected the cash flow of refuelers and made offshore refueling impossible.

Following the recent announcement of the SARS regulatory adjustment, the South African Maritime Safety Authority (SAMSA), which is responsible for licensing offshore refueling operations, has continued to issue such permits.

The impact of the amendment to the Regulation is to allow offshore vessels to act as floating storage warehouses through the storage of fuel that is subject to temporary imports before being supplied to vessels passing through the country’s waters. That change has been extended to onshore storage facilities to allow operators who do not have floating storage facilities to continue operating.

Thanks to this revised regulation, with 85 percent of ships that have passed through Suez now circling Africa between Europe, the Americas, the Middle East and the Far East, they can choose to refuel here instead of diverting to Mozambique, Namibia and other neighboring countries.

South Africa is ideally located in a geographical location to take advantage of the shipowner’s need for refueling. If they do not refuel off the coast of Algoa Bay but travel to Maputo and other neighboring ports, ships will have to spend additional time and pilot costs to enter ports that do not have offshore refueling facilities. Meanwhile, South Africa, for its part, loses significant revenue from fuel sales.
Source: VITIC (excerpted from the report on policies and regulations in the field of logistics in Vietnam and the world)