'We're paying duty on the VAT
amount, and waiting 6 months
for refunds'
ZIMBABWE IMPORTERS will be forced to come up with an additional Zim$2 billion (R14bn) annually to meet the demands of customs duty on goods from South Africa under existing regulations, which 'could be the final nail in the coffin of the industry', says Rhett Hill, chief executive of the Shipping and Forwarding Agents Association of Zimbabwe.
We have a situation where up to 90% of SA exports (under current trading conditions) will be VAT rated by the South African authorities. Importers will pay the VAT and pay duty into Zimbabwe on the VAT amount, he says.
They will then be expected to claim both overpayments back from SA VAT refund company and then from Zimbabwe customs. Given the current experience of such paperwork, the most optimistic outlook gives this process an average six month lifespan. This has enormous cash flow implications.
Where SA exporters of goods to Zimbabwe are charging VAT on their invoices, then the Zimbabwe importer is being charged customs duties into the country on the value of the goods, including VAT, he says.
There does exist in Zimbabwe customs legislation provision for customs not to raise duty on the VAT amount. However, we are caught in a Catch 22 situation in that the VAT amount will not be included in the value for duty purposes if the Zimbabwe importer can prove that he has already claimed it back.
As he has not yet done so, and it is impossible to claim back before he clears the goods into Zimbabwe as the Zimbabwe import document is a part of the claim back procedure, he is charged duty on the VAT amount.
The issue, says Hill, is about proof of export of the goods from South Africa. If the VAT authorities had
consulted the forwarding agents, he says, a simple and effective way of controlling this could be suggested
without the current measures being necessary.
We have already been down the route of proving export of goods from SA in relation to transit traffic, and have in place a system that is simple yet effective, and acceptable to SA customs.
We could very easily put in place a similar system for all exports from SA into Zimbabwe, in all cases proving export from SA by producing Zimbabwe import documentation, regardless of the terms of delivery. What could be simpler?
South African Revenue Services authorities stated recently that while operations with Zimbabwe did not fall under the same agreement as with the BLNS countries, they were investigating ways and means of simplifying customs and revenue details between the two countries.
By Leonard Neill
