VAT bond issue amicably resolved

ALAN PEAT THE PROBLEM of forwarders having to put up a bond for the value added tax (VAT) that they defer “has become a non-issue”, according to consultant Edward Little, adviser to the SA Association of Freight Forwarders (SAAFF). This arose in the recently proposed amendments to customs’ deferment policy – requiring guarantees for VAT deferred, which forwarders are already doing for deferred customs duty. This was a major concern to the clearing and forwarding industry and to importers – with numbers pleading that finding such extra funding could put many out of business, added to the complaint that financial institutions were unlikely to risk underwriting all the extra bonds required. But customs’ alternative, that they should put a risk management system into place to assess the risk involved in allowing any entity to defer the payment of duty and VAT, seemed to fit the bill. According to Little, it seems to have satisfied the auditor-general – who had originally proposed the new guarantee – and could, according to the assessment of each applicant, even see them having to pay a lower bond for both purposes than their current bond for duty alone. “It was a very amicable agreement,” he said. But when the system will be in place is still just a guess, Little added, suggesting that customs are unlikely to be able to do this overnight.