Notice of Expiration of VAT Certificate Issued in Terms of Schedule 1(8) of the Value Added Tax Act 89 of 1991

Background

1.On 15 March 2020, the Minister of Cooperative Governance and Traditional Affairs, Dr Nkosazana Dlamini Zuma ("the Minister"), declared a national state of disaster in terms of Section 27(2) of the Disaster Management Act, 57 of 2002 ("the Act") (See Government Gazette Notice No. 43096 of 15 March 2020).2.Having declared a national state of disaster, the Minister promulgated regulations in terms of section 27(2) of the Act. In the Regulations published on 25 March 2020 in Government Gazette No. 43148, the Minister set forth a list of essential goods ("essential goods"). The essential goods were contained in Annexure B, paragraph A (Categorisation of Essential Goods and Services during Lockdown) of said Regulations.3.Rebate Item 412.11 provides for the relief of distress of persons caused by, amongst others, a national disaster, such as the Covid-19 pandemic. The relief provided under Rebate Item 412.11 is an exemption of VAT at the time of importation (clearance).4.To operationalise Rebate Item 412.11 and afford an exemption of VAT for imports of essential goods, the South African Revenue Service requested ITAC to issue the VAT certificate.5.ITAC issued the VAT Certificate, which came into effect on 8 April 2020. The VAT Certificate provides that it may be amended from time to time.

Discussion

6.To date, SARS has recorded significant imports of essential goods benefitting from an exemption of VAT under the VAT Certificate. With the advent of Alert Level 3, the domestic economy will see increased activity, including production of essential goods.7.Additionally, there is no indication, based on information available to ITAC, that the continued incentivising of imports through an exemption of VAT is necessary.8.On a policy level, although the benefit afforded imports through the exemption of VAT at the time of importation is small, imports and domestic production of essential goods should be competing on a level playing field.9.The VAT Certificate provided that it may be amended from time. Pursuant to this Notice, the validity period of the VAT Certificate is being amended, which period is set forth in a new certificate being issued herewith.10In light of the foregoing consideration, ITAC is issuing a new VAT certificate, which will remain in effect up to and including Friday, 5 June 2020. As a result, imports of essential goods will no longer benefit from an exemption of VAT after that date.

Certificate issued in terms of Schedule 1(8) of the Value Added Tax Act, Act 89 of 1991, Rebate Item 412.11/00.00/01.00

Pursuant to this certificate (Certificate), the International Trade Administration Commission of South Africa (ITAC) hereby certifies that for the purpose of Schedule 1(8) of the Value Added Tax Act, Act No. 89 of 1991, item no 412.11/00.00/01.00, the list of essential goods set out in Annexure B of the Regulations (the Annexure B list of essential goods) (R.398, Government Gazette No. 43148 of 25 March 2020) under the Disaster Management Act, Act No. 57 of 2002 (the Disaster Management Act), are goods imported for the relief of distress of all persons in South Africa as a consequence of the COVID-19 pandemic, which was declared a national disaster on 15 March 2020 by the Minister of Cooperative Governance and Traditional Affairs in Government Gazette Notice No. 313 of Government Gazette No. 43096 in terms of section 27(2) of the Disaster Management Act (the National Disaster).This Certificate does not apply to, and therefore does not cover, the following goods set out in the Annexure B list of essential goods:1. goods that are subject to an ordinary customs duty as set forth in Schedule No. 1 to the Customs and Excise Act, Act No. 91 of 1964 (the Customs Act) and a trade remedies duty (anti-dumping, countervailing or safeguard duty) as set forth in Schedule No. 2 to the Customs Act;2. goods that would be subject to the duties referred to in paragraph 1, but that are entering South Africa duty fee because of a preferential trade agreement or other agreement, such as a customs union3. goods that are currently subject to an application made under the International Trade Administration Act, Act No. 71 of 2002 (the ITAC Act), which application was submitted to ITAC's Tariff Investigations units for tariff assistance in terms of No. 1 to the Customs Act; and 4. goods that are currently the subject of an investigation by ITAC's Trade Remedies units.The goods referred to in paragraphs 3 and 4 above are set out in the table immediately below, together with the relevant tariff subheadings.

Tariff Investigations: