Your questions answered
Client Question 1:
We are a South African registered NPC using a commercial vehicle to temporarily import equipment from Zimbabwe to South Africa using a temporary import permit. Do we need to pay the VAT and then request it back because of VAT exemption applicable for NPCs, or can we apply for a VAT exemption in advance?
Regarding the goods imported to a South African registered NPC, the following provision from VAT exemption from Schedule 1 paragraph 5 of the VAT act applies.
- Goods permitted under conditions prescribed by the International Trade Administration Commission which are forwarded unsolicited and free of charge by a non-resident to-
(a) a public authority or a municipality; or
(b) any association not for gain which satisfies the Commissioner that such goods will be used by that association exclusively-
(i) for educational, religious or welfare purposes; or
(ii) in the furtherance of that association’s objectives directed to the provision of educational, medical or welfare services or medical or scientific research; or
(iii) for issue to, or treatment of, indigent persons:
Provided that the recipient of the goods responsible for the distribution has furnished an undertaking that-
(a) such goods are for the exclusive use by the organization or for free distribution;
(b) such goods will not be sold, leased, hired or otherwise disposed of for gain; and
(c) no consideration or other counter-performance may be accepted by any person in respect of such goods.
Regarding the commercial vehicle. Foreign commercial vehicles are allowed to drive into South Africa and be used while in South Africa providing they have the documentation as specified by their country and South Africa. A list of the documentation required for a commercial vehicle to cross over from Zimbabwe to South Africa is listed here https://aa.co.za/zimbabwe-cross-border-information/. Note there is no change in ownership, the vehicle remains legally registered in Zimbabwe. Thus the vehicle is not formally imported into South Africa. Thus there are no duty and VAT payments. Note there is no change in ownership, the vehicle remains legally registered in Zimbabwe. There are no duty and VAT payments.
Client question 2:
I have a few returning residents who are bringing in their vehicles into SA. Are they exempted from paying duty and VAT, or is VAT payable?
This scenario falls under paragraph 8 of Schedule 1 of the VAT Act and Schedule 4 of the Customs and Excise Act, specifically under rebate code 407.04.
First, below are a exerts from the Customs and Excise schedule relating to the exemption of duty payment. Note that the rebate code needs to be provided during customs clearance. All conditions as stipulated in the section notes and in the rebate description needs to be adhered to.
Paragraphs 8 of Schedule 1 of the VAT act outlays conditions for the VAT exemption. Note that if there are additional requirements or limitations or relaxations which differ from the Customs and Excise Act, the provisions of Schedule 1 of the VAT act shall prevail.
In order to qualify for an exemption-
(i) the goods must match the descriptions below;
(ii) any requirements or limitations contained in that particular description must be complied with; and
(iii) the Notes below must be complied with,
Exert from paragraph 8 Schedule 1 relating to rebate item 407.04 follows:
“10.For the purposes of item no. 407.04/87.00/01.00 the vehicle in question shall not be deemed to be personally owned and used personally by the importer, unless such importer was, at all reasonable times, personally present at the place where the vehicle was used by him or her, and the importer shall be deemed to have used that vehicle from the date on which he or she took physical delivery of the vehicle until the date on which the vehicle was delivered by him or her to the shipper or the agent for the purpose of shipment or dispatch. Where a vehicle is imported on its own wheels, the date of shipment or dispatch shall be the date that the vehicle leaves the country where it was so owned and used en route to the Republic.
11.For the purposes of item no. 407.04, the importer shall, if that person is absent for a continuous period of longer than 3 months from the place where the vehicle is usually used in the Republic, not be deemed to have imported the vehicle for that person’s personal or own use, and tax as determined by the Commissioner is payable as from the date of such absence.
12.The exemption in terms of item no. 407.04 is allowed once per family during a period of 3 years.
13.Any entry under item no. 407.04 must be supported by a duly completed form DA 304 A.”
