Is the government offering any customs rebates or VAT exemptions on critical import supplies to importers? What is the process to apply for an import permit and rebate?

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Published: April 23, 2020

IMPORTANT UPDATE: All rebate certificates issued by ITAC under Rebate Item 412.11 of the Fourth Schedule to the Customs and Excise Act, expired at midnight on 31 May 2020. ITAC will not be issuing new certificates after 31 May 2020.

Yes, the Government is offering customs rebates and VAT exemptions on critical import supplies to importers.

 

On 27 March 2020, the South African Revenue Services (“SARS”) announced that the importation of goods defined as “Essential Goods” will be exempt from value-added tax (VAT).

 

On 29 March 2020, SARS subsequently announced a full rebate of customs duty for imports of “Eligible Goods“. Eligible goods include those imported for the relief of distress of persons in situations including ‘national disaster’.

 

In terms of the VAT exemptions, essential goods as detailed in Regulation 398 published in Government Gazette No 43148 dated 25 March 2020 and specific to the COVID-19 pandemic, will be exempt from VAT under item 412.11/00.00/01.00 of Schedule 1 to the Value Added Tax Act 89 of 1991. Schedule 1 must be read with section 13(3) of the VAT Act, which provides for the exemption. In terms of the customs duty relief, on 29 March 2020 SARS included a full rebate of customs duty under rebate item 412.11 of Schedule No. 4 to the Customs and Excise Act 91 of 1964. SARS have indicated that items falling within this definition will fall under Item 412.11/00.00/01.00 of Schedule 1 to the VAT Act.

 

This Item of Schedule 1 refers to:

Goods imported:

  • For the relief of distress of persons in cases of famine or other national disasters;
  • Under any technical assistance agreement; or
  • In terms of an obligation under any multilateral international agreement to which the Republic is a party,

 

Provided that:

  • The importation of any goods under this item shall be subject to a certificate issued by the International Trade Administration Commission and to such other conditions as may be agreed upon by the Governments of the Republic, Botswana, Lesotho and Swaziland; and
  • Goods imported under this item shall not be sold or disposed of to any party who is not entitled to any privileges under the item, or be removed to the area of Botswana, Lesotho, Namibia or Swaziland without the permission of the International Trade Administration Commission.
  • Schedule 1 must be read together with Section 13(3) of the VAT Act which states that “The importation of goods set forth in Schedule 1 to this Act is exempt from the tax imposed in terms of section 7(1)(b)”.

 

To qualify for the VAT exemption, importers of these essential goods must apply through the International Trade Administration Commission of South Africa.

 

The importation of these goods will follow the normal Customs procedure described in the external policy SC-CF-55. The rebate item is only valid for direct importations and no bonded or warehouse clearances will be permitted under this rebate item. CPC A 14 must be used for importations from outside SACU and CPC A 12 for importations from the BLNS, with measure 412.11/00.00/01.00.

 

VAT Relief:

 

The Regulation as published in the Government Gazette sets out a definition of “Essential Goods” in Chapter 2 paragraph 11A and paragraph A of Annexure B.

 

For the latest updated list of essential goods as published by ITAC on 06 May 2020, please click here.

 

Essential Goods are listed as being:

  1. Food
  • Any food product, including non -alcoholic beverages;
  • Animal food; and
  • Chemicals, packaging and ancillary products used in the production of any food product.
  1. Cleaning and Hygiene Products
  • Toilet Paper, sanitary pads, sanitary tampons, condoms;
  • Hand sanitiser, disinfectants, soap, alcohol for industrial use, household cleaning products, and personal protective equipment; and
  • Chemicals, packaging and ancillary products used in the production of any of the above.
  1. Medical
  • Medical and Hospital Supplies, equipment and personal protective equipment; and
  • Chemicals, packaging and ancillary products used in the production of any of the above.
  1. Fuel, Including Coal and Gas
  2. Basic Goods, Including Airtime and Electricity.

 

What goods will be subject to a customs rebate as a result of COVID-19?

Note that rebate certificates issued by ITAC under Rebate Item 412.11 of the Fourth Schedule to the Customs and Excise Act, expired at midnight on 31 May 2020. ITAC will not be issuing new certificates after 31 May 2020.

In terms of Rebate Item 412.11 of the Customs and Excise Act, 1964, ITAC, together with SARS, has created a process for a full rebate of the customs duties and a VAT exemption on certain critical supplies.

 

A full rebate of customs duty under rebate item 412.11 of Schedule No. 4 to the Customs and Excise Act 91 of 1964 is available where the International Trade Administration Commission of South Africa has approved the rebate for the goods concerned.

 

For the latest updated list of essential goods (critical medical supplies) in terms of VAT Rebate Item 412.11 published by on 06 May 2020, please click here.

 

Please see the International Trade Administration Commission of South Africa’s website for the application form for this rebate and the related Standard Operating Procedure, or click on the following link and navigate to the COVID-19 Standard Operating Procedure, Rebate Application Form and Guidelines (Rebate 412 – Remedy for Critical Medical Supplies re COVID-19), List of Critical Supplies, and Goods qualifying for import VAT exemption under Rebate 412.11.

 

For the latest customs and excise information published by SARS, please click here

For the revised Draft Disaster Management Tax Relief Bill, published on 01 May 2020 please click here.

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