Think twice before importing a motor vehicle into this country because you could find yourself paying value added tax (VAT) twice once in the country where the vehicle was bought and again in South Africa.
Changes to the VAT Act last Friday prohibit a motor vehicle from being registered in South Africa unless proof is produced that South African VAT was paid on the import, regardless of whether sales tax or VAT was paid in the country of origin.
Henry Adams, tax manager at Coopers and Lybrand, says the Sales Tax Act had this provision but the VAT Act did not because private sales of motor vehicles are not subject to VAT.
Someone importing a vehicle, particularly from a neighbouring country, was obliged to pay VAT to the Receiver of Revenue within 30 days of the import, but in practice this seldom happened and no control measures were in place.
Now motor vehicle registering authorities, like municipalities, will have to introduce systems to regulate the registration of imported vehicles. The implementation date of this amendment will be set sufficiently far in the future to give municipalities time to make arrangements to deal with it.
The amendment to the VAT Act does not affect registration of locally made motor vehicles or re-registration of a previously imported vehicle that is now being sold by the local owner.
The amendment refers to "motor vehicles", which includes, for example, trucks and motor bikes.