RAF and SARS Clash Over R5 Billion Payment

The Road Accident Fund (RAF) is locked in a dispute with the South African Revenue Service (SARS), as the tax authority allegedly continues to deduct funds despite a court order. The disagreement stems from a settlement concerning Eskom and diesel refunds, with billions of rand at stake.

Contempt of Court Allegations

The RAF has filed for a contempt of court order against SARS due to the tax authority’s supposed failure to abide by an interim interdict. This interdict forbids SARS from deducting R5.1 billion from fuel levies collected for the RAF. Collins Letsoalo, the suspended RAF CEO, previously appealed to Parliament’s transport portfolio committee for assistance regarding SARS’s non-payment.

Suspended RAF CEO Collins Letsoalo appealed to Parliament’s portfolio committee of transport in a meeting with the RAF last week to help the fund with the issue of non-payment by Sars.

— World Today News (@worldtodaynews) March 1, 2024

“SARS has acted recalcitrant. In fact, we have opened a case of contempt of court against them,”

—Collins Letsoalo, Suspended RAF CEO

According to a recent report, the RAF is grappling with rising medical inflation, which has increased the financial strain. South Africa’s medical inflation reached 6.1% in July 2024, adding to the financial burden on the fund.

The Eskom Diesel Refund Dispute

The controversy between the RAF and SARS revolves around “diesel refunds” claimed by Eskom under the Customs and Excise Act (CEA). SARS determined Eskom was not entitled to these refunds during a period of roughly 30 months between 2019 and 2021. This led to a settlement agreement on October 17, 2024, wherein SARS agreed to pay Eskom around R5.1 billion.

SARS informed the RAF about this settlement on November 12, 2024, stating that it would recoup the R5.1 billion from RAF levies over two months. However, SARS began deducting the first tranche of approximately R1.2 billion, which the RAF only learned about on February 26, 2025. The RAF subsequently declared a dispute with SARS in December 2024.

Despite a court interdict, the situation remains unresolved, with implications for both the RAF’s finances and the ongoing dispute resolution process. The outcome will ultimately determine the financial obligations of each party and its impact on the fund’s operations.