Is imported steel construction machinery exempt from VAT?
12 May 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: May you kindly
assist with information on 'Exemption of import VAT':
How or when does a company qualifies for this
kind of exemption,
On what kinds of goods or services does it
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
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.