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Thread: Import VAT on repair and returns

  1. #1
    just me duncan drennan's Avatar
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    Import VAT on repair and returns

    We're bringing a unit back into the country for a warranty return and my understanding is that we'll have to pay the full VAT amount on that import, and then claim it back after it has been exported. I received a document from DHL which says,

    Temporary admission of goods under Rebate Item 470.00 shall be subject ,” MUTATIS MUTANDIS”,TO THE PROVISIONS OF THE Rules for Section 75 of the Customs Act of 1964.Parts admitted under the provisions of rebate item 470.02 shall be used and the goods submitted for repair, cleaning or reconditioning shall be exported within 6 months from the date of entry thereof. A deposit amounting to full duty and vat must be lodged with Customs pending re-exportation of the goods within 6 months. We must the produce all the export papers where the goods have been exported under Customs supervision and we in turn can apply to liquidate the said deposit.

    When goods have been exported from South Africa to any country outside ZA borders, the goods must be registered upon export on a DA 65. Once the goods have been repaired and subsequently returned to South Africa, the goods must be cleared on a “GR” entry, duty and vat will have to be paid on the “COST OF REPAIR”ONLY. Proof in the form of all the export papers, b/e etc and the DA 65 must be produced when the shipment is cleared through Customs.

    In the event of “WARRANTY REPLACEMENTS/REPAIRS”, a copy of the Warranty Agreement must be produced when shipment is presented to Customs for clearance. The age of the goods must be within the 1,2or 3 year period as stipulated in the warranty agreement. All the relevant export papers, together with correspondence between the importer and supplier must be produced when submitting clearance to Customs.
    The way is sounds in that document the VAT "deposit" can be claimed back on export, but when I spoke to DHL they indicated that it is just claimed through the usual VAT payment/refund process.

    What exactly is the process (and necessary documentation) for VAT relating to repair & return goods? This payment will result in a total VAT credit (refund) for the period concerned.

    I guess we have two options (not sure), (1) claim a refund, or (2) just carry it over until the next period.

    If we make a refund claim, what is the process and the typical time it takes to resolve?

    If we carry it over, how exactly is the credit accounted for in the next VAT period? e.g. if we have a R5k credit now, and then a 10k due on the next period, that would mean only 5k is due to SARS - how does that get handled within eFiling?
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  2. #2
    Diamond Member Justloadit's Avatar
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    There is nothing required to show if you use the normal VAT process.
    The VAT you paid DHL, is on an invoice which is allocated to "Input VAT". There is nowhere on the VAT input section, which refers to "Turn Over" as with the Output VAT section. Remember that not all items purchased, cab be claimed with a VAT input, hence this amount has been left out, as there is no sure exact calculation that you can apply to purchases against VAT you can claim. An example is Petrol, staff emoluments, or suppliers who are not VAT registered.

    So your input VAT will have a R5K extra due to the DHL invoice, which in turn will diminish the VAT paid for that period. What is important, is to ensure that all your documentation is kept together with your VAT report, in the case that there is a VAT audit, you can substantiate the VAT claim.
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