SARS ruling may hit component manufacturers

COMPONENT manufacturers could be hit by a South African Revenue Service (Sars) ruling that refund item 536.00 relating to original automotive components supplied to original equipment manufactures (OEM) will be amended to reduce the claim period from two years to six months. National Association of Automotive and Allied Component Manufacturers’ executive director Roger Pitot says: “The reduction in the period allowed for the claiming of duty refunds on imported sub-components used in locallyproduced components sold to OEMs is not related to the MIDP changes but is a procedural change implemented by Sars where they are enforcing existing legislation and not allowing the accepted current practice of two years. “We expressed our objection to them and explained that the reason it takes so long to file the refund application is that the component manufacturers have to wait for the OEMs to give them a certificate confirming that the components have been used in production. “There is no doubt that if it is enforced immediately some companies will not be able to claim refund of duties amounting to millions of rands, and since the assumption of a refund is already built into their price to the OEMs, it could result in significant losses on affected components,” said Pitot.