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Is imported steel construction machinery exempt from VAT?

12 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: May you kindly assist with information on 'Exemption of import VAT':

1.       How or when does a company qualifies for this kind of exemption,

2.       On what kinds of goods or services does it qualify,

3.       From which import countries does a South African company qualifies for this kind of exemption?

My company is importing steel constructing machinery from overseas and is currently not yet registered for VAT.

A: The exemptions from value-added tax that apply on the importation into the RSA of certain goods are set out in Schedule 1 of the Value-Added Tax Act.  In order to qualify for an exemption—

(i) the goods must fall under one of the descriptions listed in the Schedule;

(ii) any requirements or limitations contained in that particular description must be complied with; and

(iii) the Notes below must be complied with, regardless of whether or not the goods are required to be entered, customs duty is payable or a rebate of customs duty is granted in  terms of the Customs and Excise Act.

In order for us to provide any guidance we would need to know the customs code (item code).  There are two instances where machines imported may qualify for the exemption and they are:

490.40/00.00/01.00 Machinery or plant (excluding tower cranes) for use on contract in civil engineering or construction work, in such quantities and at such times and subject to such conditions as the Commissioner, on the recommendation of the International Trade Administration Commission, may allow by specific permit

490.90/00.00/01.00 Machinery or plant (excluding tower cranes) for use on contract other than for purposes of civil engineering or construction work, in such quantities and at such times and subject to such conditions as the Commissioner, on the recommendation of the International Trade Administration Commission, may allow by specific permit.

The Schedule does not make any reference to the country of origin.  You may be well advised to refer your request to a customs duty specialist. 

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision. 


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