SARS: Sorry, no VAT refunds

Namibian traders importing goods from South Africa have been battling to get their VAT refunds from SARS.

07 December 2017 | Economics

It could mean that we have to write off hundreds, if not thousands, of dollars. – Namibian trader

CATHERINE SASMAN - The South African Revenue Service (SARS) says the non-payment of value-added tax (VAT) refunds to Namibian traders – as well as traders in the Southern African region - is because of “a lot of non-compliance” with regulations that govern the refund processes.

Sandile Ntoyi in the SARS international relations office in Pretoria, South Africa, said most businesses have been using South Africa’s vendor export codes on indirect exports “as though these were direct exports”.

“As a result these have been rejected,” Ntoyi said.

Ntoyi added: “There has been a discussion though to reconsider the rejected claims on the basis that some traders were not sure how to go about submitting their VAT refund claims. At the moment SARS is processing the resubmissions that were rejected from June 2017. The process of verifying such will still take place as usual and these will be refunded as soon as possible if all requirements are met.”

He said traders were advised to register with customs and excise for importer and exporter codes.

Ntoyi said all traders should get registered by the end of February 2018.

“There is also a communication as to how the clearances should be done going forward to help alleviate the same problem from occurring,” Nyoti said.

Nothing since March

A SARS agent collecting and processing claims from Namibian vendors said there have not been any refunds from SARS since March.

Alister Slamat, the Namibian manager of VAT Refund Administrator (Pty) Ltd, confirmed SARS’s explanation that claims have not been qualified because customs documentation was incorrectly filled in.

This is the so-called RSA SAD500 document that indicates that claims are direct exports, which do not qualify for a VAT refund.

South Africa’s Export Incentive Scheme, published in the Government Gazette of 13 November 1998, draws a distinction between direct and indirect exports.

A direct export means that when a South African vendor supplies movable goods and consigns and delivers them to a recipient at an address in an export country, the supply will be zero rated.

An indirect export is where a purchaser takes delivery of the goods in South Africa and then exports the goods via a designated point of departure himself or herself.

The Export Incentive Scheme only applies to indirect exports.

An official at Slamat’s office said there are “endless problems” and constant battles to get SARS to pay out the SARS refunds, ascribing the situation to, at best, sloppy administration, to haphazard governance and corruption within SARS.

The South African media earlier this year reported that South African taxpayers have claimed that they were not being paid their VAT refunds timeously. This was confirmed when then minister of finance Pravin Gordhan admitted that SARS had N$20 billion in outstanding VAT refunds.

Fed up

Some Namibian businesspeople are also unconvinced by SARS’s explanation, arguing that the outstanding VAT refunds could not affect practically each and every trader, not just in Namibia but in the entire Southern African region.

Traders importing goods from South Africa by road have been battling to get their VAT refunds from SARS, some from as early as January.

Strangely, they say, the non-payment of the VAT refunds does not affect airport imports, given SARS’s explanation.

One trader preferring anonymity said her family business was waiting for a VAT refund amounting to more than N$350 000 for this year.

She said the company used to get VAT refunds at least every three to four months. By now the company has submitted multiple claims and is still waiting for VAT refunds.

“We have not received VAT refunds since January. We have not been refunded for the entire year. We have been told at the South African border that we have not completed our documentation properly. However, this has been told to all traders across the board,” this source said.

Approval

The non-payment of the VAT refunds in effect means that traders lose 14% on every transaction done and in effect means that traders are being taxed twice in the two countries for the same goods bought.

“It really affects our cash flow. It is a hugely detrimental situation. It could mean that we have to write off hundreds, if not thousands, of dollars. We have paid, but we are not being paid back,” she said.

Another exasperated trader, also preferring anonymity, said: “They [SARS] have your profit and some. No business can operate like this. If you are financing SARS at zero per cent interest and they have your profit for a year or more you will go under. With the current economy profit margins are much smaller than South Africa VAT. We are paying their VAT and ours. It is impossible to make more margin than the VAT and enough to cover your overheads.”

Slamat said after a long debate regarding the matter of direct or indirect exports, his company had received approval to forward claims back to SARS for payment and that they were now awaiting payment to be made on the claims.

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