Calculating import duties and VAT for imports into South Africa

The ultimate price of imports can be seriously impacted by import duties and VAT (Value Added Tax). It is therefore critical to understand how to calculate your import duties and VAT. Being able to determine the final outlay ahead of time will enable you to know whether the imports are likely to be financially viable. There is a bright side: importers who are VAT registered in South Africa and foreign entities are allowed to claim back the VAT on their imports.

Calculating import duties

There are 4 ways in which South African Customs imposes import duties. These are:

1. Free (nil tax or import duty payable);
2. Rated or specific;
3. Ad valorum; or
4. Compounded (combination of rated and ad valorum)

The South African Customs Tariff Book (a document that lists all traded products as well as their duties) classifies each item based on a tariff or HS code. Every tariff code is associated with a unique duty tax.

Note: Your duty rate will vary depending on which country you are importing your product from. Ensure that you know what the correct duty rate is, especially if your imports originate from the UK (United Kingdom), EU (European Union), EFTA (European Free Trade Association), MERCOSUR (Southern Common Market) or SADC (Southern African Development Community) countries.

After finding the duty tax rate, follow the examples given below to calculate the total chargeable duty tax. Then add this total to your product’s purchase price to establish your total landed cost ex VAT.

Rated or specific calculation:

Volume of goods = 1000m², Duty tax = 40c per M²

Total duty tax = 1000 x 40c = 40 000 cents or R400

Ad Valorem Calculation:

Cost of goods = R1000, Percentage duty tax = 20%

Total duty tax = R1000 x 20/100 = R200

 

Calculating VAT

Once you have calculated your import duty, you will then be able to determine what amount the VAT will be. In order to be cleared through South African customs, the VAT must first be paid.

Calculate VAT as per the example given below:

Price of goods on commercial invoice (e.g. R100)

+ 10% of commercial invoice (e.g. R10) ()

+ duty tax (e.g. if the duty tax percentage is 20% then R20 is added)

= Total (e.g. R130)

15% VAT is imposed upon this total amount.

 

The additional 10% of the value of the commercial invoice is known as the upliftment value and represents an amount in lieu of transport and insurance costs is occurred when bringing the imported goods to South Africa.

 

Note to entities importing to South Africa and trading with Southern African Customs Union (SACU) (Botswana, Lesotho, Namibia, Eswatini) countries:

SARS (South African Revenue Service) implemented technical system upgrades on 1 February 2020. The change has to do with calculating VAT on products imported for home use (i.e. in South Africa) from SACU countries. It particularly relates to the legal provisions of section 13(2) of the South African Value-Added Tax Act of 1991 and rule 120A.02(a) of the South African Rules to the Customs and Excise Act 91 of 1964.

Basically, there is no 10% upliftment value in the VAT calculation for imported products that originate from SACU countries. Since SACU countries are part of the same customs union as South Africa there are no import duty taxes on products imported from these countries either. The 15% VAT due is calculated on the commercial invoice value only.