Author: Cliff Watson (Grant Thornton)
With the ever increasing mobility of business people globally, the requirement for regular cross border travel is increasing. Consultants and technicians are required to travel at a moment’s notice to provide services and goods to customers. However, travellers, and their employers, who are not paying attention to the VAT and customs duty rules may find themselves facing unnecessary tax risk.
When exporting goods, vendors have to comply with stringent documentary requirements to apply the zero rate for VAT purposes on such exports. Often, business travellers such as consultants, technicians and even sales representatives physically take the goods out of the country on their person, or as part of their personal luggage and then neglect the documentary requirements. The same is true for instances when the goods aren’t taken out of the country to be sold, but are used to provide services and are subsequently returned to South Africa.
In order to zero rate the sale, the basic documentation that must be obtained and retained where the supplying vendor physically delivers goods to its customer at an address in an export country by accompanying baggage are the following:
- the supplier’s zero rated tax invoice
- the customer’s order or the contract between the parties
- Customs and Excise documentation bearing an original SARS Customs date stamp
- proof that the goods have been received by the customer in the export country
- proof of payment for the goods
Re-importation of goods
When a traveler returns goods to South Africa, he or she must identify the goods for re-importation and, depending on the port used when returning, declare such goods by completing either the Traveller Card (TC-01) or Travellers Declaration (TRD1) to avoid incurring customs duties and VAT. However, only goods that can be adequately described and identified by their features and characteristics such as cameras, video cameras, jewellery, laptops, etc. can be exempt from customs duties and VAT on re-importation.
Articles that have been exported and underwent any processing, alteration or repair while outside the country will be subject to customs duties and VAT on re-importation based on the value of the processing, alteration or repair. If such processing, alteration or repairs took place at no cost under warrantee or other agreement, there will be no customs duties of VAT payable on re-importation.
When these travellers do not adhere to the documentary requirements, they may face additional VAT output tax, penalties and interest if a zero rate was declared on the export sale or customs duties and VAT on re-importation of the goods used abroad.
Similar rules apply to foreign travellers importing goods to South Africa. Travellers should also be mindful of the duty-free allowances afforded to them when coming to, or returning to South Africa.
Therefore, before anyone jumps on a plane for business purposes, carefully analyze what goods are being taken along and determine whether these should be declared for customs duty purposes to avoid being exposed to unnecessary VAT, penalties, interest and customs duties.
This article was first published on gt.co.za