Must a vendor pay customs VAT on imported goods and again when the goods are sold?
19 May 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: SARS has
disallowed all the customs VAT claimed for the January 2015 VAT period, even
though the amounts were paid by the taxpayer in the month of January. We were unaware that our clearing agent has a
deferred tax agreement with SARS, so the amounts were only paid over to SARS in
February. Basically what SARS seems to
want here is that the taxpayer should pay the customs VAT on import of the
goods and then pay the VAT on the sales to SARS (effectively paying the VAT
twice), then claim it back the following month. The imported goods are high
value items and the effect on the taxpayer’s cashflow is extreme. Is there any remedy for this?
Value-Added Tax was changed (with effect 1 April 2014 and again in April
2015). Your request relates to the law
as it applied before the most recent change.
Section 16(2) basically provides that "no deduction of input
tax in respect of a supply of goods or services, the importation of any goods
into the Republic or any other deduction shall be made in terms of this Act,
unless a bill of entry or other document prescribed in terms of the Customs and
Excise Act together with the receipt for the payment of the tax in relation to
the said importation have been delivered in accordance with that Act and are
held by the vendor making that deduction, or by his agent as contemplated in
section 54(3)(b), at the time that any return in respect of that importation is
furnished…” and section 16(3)(a)(iii) then provides that charged in terms of
section 7 (1)(b) in respect of goods imported into the Republic by the vendor
and paid during that tax period.
The last part (section 16(3)(a)(iii)) was the one that
became effective 1 April 2014 and replaced the "invoiced or paid, whichever is
the earlier, during that tax period” principle that applied before then.
The requirement therefore, at the time concerned, was that
the vendor could only make the deduction if the agent also paid in the same
period. Most importers were aware of
this change last year and the agents changed the way in which they were doing
business by only using the deferral arrangement when payment could still be
made in the same month.
The vendor must therefore deduct the input tax in the period
that the payment was made to SARS and not to the agent.
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