To operate legally in the alcohol industry in South Africa, make sure you meet all the necessary requirements. In this blog, we aim to alleviate the stress caused by information overload by providing you with a concise overview of the basic categories, definitions and distinctions related to South African alcohol regulations.
Key institutions
- National Liquor Authority (NLA)
- Responsible for enforcing Section 59 of the National Liquor Act 2003 and regulating the production and distribution of liquor.
- Minister issues macro manufacturing or distribution certificate
- Under the Department of Trade, Industry and Commerce (DTIC) Consumer and Business Regulation Division
- Provincial Liquor Authority (PLA)
- Regulates micro-manufacturing and retail sales (direct sales to customers) and issues liquor licenses
- South African Revenue Service (SARS)
- Monitor, supervise and collect excise and other taxes, import and export licenses
Wine category
SARS lists 5 basic categories of alcohol.
The 5 categories are:
- Spirits/alcoholic beverages: defined as “ethyl alcohol obtained by distillation of various base products, usually with an alcoholic strength exceeding 60% by volume”
- Wine and Vermouth: Wine is generally defined as “an alcoholic beverage obtained by the natural fermentation of fresh grapes, usually with an alcohol content of between 4.5% and 15% by volume”. Vermouth is made by adding flavorings or flavourings to wine.
- Ale: defined as “a light beer brewed from malt, usually with an alcohol content of between 3% and 6% per bottle”
- Traditional African beer: defined as “non-light beer usually less than 5% alcohol by volume brewed from sorghum or malt”
- Other fermented beverages (OFB): Made in the same way as wine and absinthe, but using fruits other than grapes.
Alcohol-related activities
The regulations for each category are somewhat different. However, the differences are mostly minor. We’ve highlighted any significant differences between them.
Imported alcohol
In order to successfully import alcohol through customs, all importers need a customs import code.
Importers of alcoholic beverages must also apply for a tariff ruling. The application should include the following:
- Detailed information about brand name information
- Manufacturing Process
- Ingredients
- Ingredient usage ratio
- Alcohol content
- Such other details as the Commissioner may specify
- Where applicable, a letter from a regulator confirming that the beverage complies with the provisions of the Liquor Products Act, 1989 (Act 60 of 1989)
If any of these change, a new tariff ruling must be applied for any type of alcoholic beverage before the product can be cleared for domestic consumption.
Making alcohol
All alcoholic beverage manufacturers need to register as an Excise Manufacturing Warehouse (VM) before commencing production. The type of Excise Manufacturing Warehouse registration a company needs depends on the goods being produced (see our article on Excise and Storage Warehouses for more information).
- Spirits: A spirits manufacturer can register as either a primary (VMP) or secondary (VMS) manufacturing warehouse. A VMP is when non-taxable raw materials are used to manufacture a taxable base product that is not intended for consumption. A VMS is when taxable raw materials are used to manufacture a taxable base product that is intended for consumption (e.g. blending and/or packaging bulk spirits into a final product).
- Wine and Vermouth: A site may be licensed as a Special Manufacturing Vault (SVM) for the purpose of carrying out manufacturing processes such as stabilization or filtration. Sites that only carry out maturation processes would not be licensed as SVMs.
- Malt beer: Can be licensed as a virtual machine
- Orb: May be authorized as SVM
All alcoholic beverage manufacturers must also apply for a tariff ruling, as described above in the “Imported Alcohol” section.
For alcohol manufacturers that use stills within their production warehouse, each still also needs to be registered individually with SARS.
All categories of alcoholic beverage manufacturers are subject to excise duty if the goods are consumed as alcohol within the Southern African Customs Union (SACU). Excise duty is exempted if the goods are exported for consumption outside the SACU.
When and how do I pay GST?
Based on the licensed manufacturer’s monthly excise account, the relevant excise tax is payable to SARS via electronic declaration. The payment deadline for each type of alcohol is listed here.
Storing Alcohol
If alcohol is stored without paying excise duty, an excise warehouse is required.
The storage warehouse options and differences for each type of wine are as follows:
- Spirits: Special Purpose Warehouse (SOS) for limited purposes; SOS licensed for export; SOS licensed as a supplier of duty free shops/aircraft and/or ships; SOS licensed as a supplier of duty free shops/aircraft and/or ships; SOS for denatured spirits; SOS licensed as an intermediate supplier of spirits packaging/repackaging; SOS licensed as a registered tax refund user
- Wine and Vermouth: Storage warehouse (OS); SOS; SOS licensed for duty free shops/aircraft and/or ship suppliers; other storage considerations when producing wine on behalf of wine growers
- Malt beer: SOS is licensed for export; SOS is licensed for duty free shops/aircraft and/or ship suppliers. Malt beer stored in SOS warehouses shall not be sold or shipped to the local SACU market without the written approval of the Commissioner. Products stored in such warehouses are only intended for export or final consumption outside SACU.
- Orb: OS; SOS for export license; SOS for duty free shops/aircraft and/or ship suppliers license
Selling alcohol in South Australia
All alcohol traders in South Africa need a liquor license, whether selling directly to customers (e.g. bars), micro manufacturing or large-scale manufacturing. Large-scale manufacturers and/or distributors of alcohol must register with the NLA. The NLA offers two types of licenses: a manufacturer’s license and a distributor’s license. The PLA offers a variety of licenses (e.g. Restaurant Liquor License, Pub Liquor License; Dance Hall Liquor, Sorghum Beer License, Wholesale License, Micro Manufacturer License, Grocery Store Wine License, Liquor Store License, etc.).
Export alcohol
All exporters are required to register with customs and use their unique customs code number when clearing their export goods.
Under the Liquor Products Act (Act 60 of 1989), exporters of alcohol need to obtain an export certificate from the Department of Agriculture, Land Reform and Rural Development (DALRRD). Exceptions are made for the export of pharmaceutical products and beer.
When exporting to a country that has a trade agreement with South Africa, you will need to register the trade agreement and obtain a certificate of origin. For more information on trade agreements relevant to South Africa, see our article on trade agreements.
As noted above in the section on alcohol manufacture, goods may be exempt from the relevant excise duties if they are exported for consumption outside of the Southern African Customs Union.
Transporting alcohol
If you are transporting alcohol on which excise duty has not been paid, you will need a bonded cargo handler or road haulier licence. For more information, see our article on bonded cargo transport.
Still images (own, repair, sell, import)
If you own, repair, sell or import a still, you will need to register your still with SARS. If you are a home brewer, you will need to register your still and register yourself as a home brewer. If a spirit manufacturer using stills is registered as a manufacturing warehouse, each still will also need to be registered. Registered still manufacturers will have a SARS still manufacturing number and each still must have a serial number.
Self-use alcoholic beverages
If you are making alcohol for your own use only, you will also need to register with SARS as a taxable goods manufacturer. So, as with “stillers” above, to legally distill at home you will need to register the still (i.e. get a licence to own the still) and yourself (i.e. get a licence to use the still). You must apply for a micro liquor manufacturing licence. This allows you to make alcohol, but not to sell it.
- Malt beer: In South Africa, home brewing is legal, but only for personal consumption. There are limits on the amount of alcohol you are allowed to store, but they may vary from province to province.
- wine: You need to register with SARS as a ‘Non-commercial manufacturer’.
in conclusion
Because the alcohol industry is so large and lucrative, government regulations are numerous and strict. Legislation and its interpretation are not always clear. A careful, systematic approach to compliance is required.
Therefore, if you require any more information or would like assistance with any aspect of your application, please feel free to contact one of our advisors on 087 550 1038. We will be happy to help you.
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