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South Africa Guidance on VAT levied on the Importation of Goods — Orbitax Tax News & Alerts

The South African Revenue Service (SARS) recently published a new guide dated 31 August 2022 on Value-Added Tax Levied on the Importation of Goods into South Africa. The guide is meant to enhance the understanding of the payment of VAT on goods imported into the country, covering:

  • Payment of VAT, including specifics on:
    • entry for home consumption;
    • deferment of VAT;
    • exemptions for certain goods imported into the country; and
    • security for the VAT that may become payable;
  • Calculation of VAT, which is standard rated (15%) on imports with a 10% uplift on imports from countries other than Botswana, Eswatini, Lesotho, or Namibia (Customs Union with South Africa); and
  • Refund of VAT levied on the importation of goods into South Africa in certain cases, such as when the importer is a non-registered VAT vendor or cases of duplicate clearance.

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1. Introduction

Value-added tax (VAT) is an indirect tax charged on the consumption of goods and services in South Africa. Import VAT and customs duty may be leviable on goods that are imported into South Africa. This has to be paid or secured before the goods will be released from SARS Customs' control. VAT paid on the importation of goods by a vendor may be deducted as input tax, subject to the following.

From 1 April 2015, VAT may only be deducted during the tax period when the goods are released under the Customs and Excise Act 91 of 1964 (the Customs and Excise Act).

For purposes of deducting the VAT paid on the importation of goods, the vendor making the deduction must be in possession of the following documentation:

  • An "EDI Customs Status 1 Release Message"
  • A valid bill of entry or other document prescribed by the Customs and Excise Act (for example, form SAD 500 and any additional SAD document that might be required)
  • The receipt number for the payment of such tax, that is, the receipt issued on eFiling

From 1 April 2015 where the goods are imported by an agent acting on behalf of the vendor (being the principal), and the bill of entry or such other document prescribed by the Customs and Excise Act is held by the agent, the agent must furnish the vendor with a statement within 21 days at the end of the calendar month during which the goods were imported, containing the following particulars:

  • The full and proper description of the goods
  • The quantity or volume of the goods
  • The value of the goods
  • The amount of tax paid and the receipt relating to the payment of such tax, that is, the receipt number issued on eFiling for such payment

The vendor must be in possession of the aforementioned statement at the time the VAT return containing the deduction is submitted to SARS. Furthermore, in addition to furnishing the statement, the agent must maintain sufficient records to enable the name, the address and VAT registration number of the vendor to be ascertained.

Further, the –

  • the goods that are imported must be acquired by the vendor wholly or partly for consumption, use or supply in the course of making taxable supplies;
  • VAT at the standard rate must have been charged on the importation of the goods; and
  • the appropriate documentation must be held by the vendor, in this case, a bill of entry or other prescribed customs documentation86 which may be required in the circumstances, including the receipt for the payment of the VAT to Customs, that is, the receipt number on eFiling. Should such bill of entry or other prescribed documentation be held by the vendor's agent, the vendor must be in possession of a statement received from such agent containing, amongst other particulars, the receipt number for the payment of the VAT on importation issued on eFiling.