Import VAT is a tax paid on goods bought in one country and imported into another. In the case of European Union (EU), import VAT is the tax paid on goods bought from any country outside the EU and imported into the territory of the union.
VAT On Imported Services In South Africa
The VAT principles applicable to imported services and goods sold in execution of a debt are first briefly described below.
Imported services
Subject to certain exceptions, VAT is payable at the standard rate of 15% by a South African recipient of imported services. This is irrespective of whether the recipient is a registered VAT vendor or a non-vendor. There are four requirements for a service to fall within the ambit of the definition of ‘imported services’ in the VAT Act, namely:
The services must be rendered by a supplier who is resident outside South Africa or who carries on business outside South Africa;
The recipient of the services must be a resident of South Africa;
The services must be utilized or consumed in South Africa; and
The purpose for acquiring the services must be otherwise than for the making of taxable supplies.
Where imported services are acquired for a value exceeding R100, the recipient is required to pay VAT on such importation where the services are acquired wholly or partly for a non-taxable purpose.
South Africa introduced legislation with effect from 1 June 2014 requiring foreign suppliers of ‘electronic services’ (e-services) to register as VAT vendors in South Africa to the extent that they make taxable supplies of e-services to South African recipients. The regulations defining what constitutes e-services were amended and the scope of what constitutes e-services was significantly broadened from 1 April 2024.
The effect of the amendment is that virtually all services that are supplied by way of electronic means such as cloud computing, computer software, music, games and any online services are now included as ‘electronic services’.
As a result, most foreign suppliers of e-services will be registered vendors in South Africa. This removed the obligation to pay VAT on such services from the South African recipient to the foreign supplier. Consequently, a South African recipient who acquires e-services from a non-resident supplier will only be required to pay VAT on imported services if the supplier is not registered as a vendor under the e-services provisions.
Goods sold in execution
Where a person purchased goods under a credit arrangement and then defaults, another person, normally the Sheriff of the court, may take possession of the goods purchased, and the Sheriff may then sell the goods in execution of the debt owed by that person.
Where goods are sold in execution of a debt, the sale is, in certain circumstances, deemed to be made in the course of an enterprise and the sale will therefore be subject to VAT. In this instance, the seller, and not the owner of the goods is required to account for VAT thereon to SARS.
The Declaration process
Where imported services are acquired by a recipient who is a registered vendor, the VAT liability in respect thereof may be included in the vendor’s VAT201 declaration. However, where the recipient is a non-vendor, such non-vendor was previously required to complete a form VAT215 and to make payment of the VAT
to a SARS branch office.
Where goods are sold in execution of a debt and the sale is subject to VAT, the VAT on such sale must be accounted for and paid separately to SARS and may not be accounted for under the VAT number of the seller or that of the owner of the goods. The seller was previously required to complete a form VAT216 and to make payment of the VAT at a SARS branch office.
Is there VAT on imports in South Africa?
The 10% mark-up on the customs value in this calculation is applicable when goods are imported from a country outside the Customs Union. When goods are exported to any of the BLNS countries, the same applies (no mark-up on the customs value to determine ATV).
What services are exempt from VAT in South Africa?
The following goods and services are zero-rated:
Exports.
19 basic food items.
Illuminating paraffin.
Goods which are subject to the fuel levy (petrol and diesel)
International transport services.
Farming inputs.
Sales of going concerns, and.
Certain grants by government.
How much VAT do you pay on imported goods in South Africa?
Any VAT charges at this point should be clearly listed on the receipt or invoice and in the UK, the current VAT rate is 20%. The only extra cost at this point is likely to be postage and packaging if this is applicable.
Are all products and services subject to VAT in South Africa?
The supply of goods and services are generally subject to VAT at the standard rate, unless such supply is specifically zero-rated or exempt in terms of the Act. Vendors making standard rated supplies are required to levy output tax at the prescribed rate on the value of the supply which must then be paid over to SARS.
How do I claim VAT on imported goods in South Africa?
Current requirements for claiming import VAT
The documentary evidence required to claim VAT on imports includes the bill of entry or other document prescribed in terms of the Customs and Excise Act, together with a receipt proving that the necessary tax was paid in respect of the said import.