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South Africa - Taxes & Tariffs

Although not meant to be all-inclusive, this can give you an introduction to some of the details you need to be aware of for specific markets.

More country-specific information is available from the Trade Information Center's Regional Databases here!

Taxes and Tariffs

Taxes

Value Added Tax: The value-added tax (VAT) is 14%. VAT is payable on nearly all imports. However, goods imported for use in manufacturing or resale by registered traders may be exempt from VAT.

              VAT is calculated on the (FOB + duty) times 10% uplift charge (surcharge).

FOR EXAMPLE:  FOB value 100, duty (e.g. 20%) + 20

                          120 

                          uplift X 10%

                         12 + 120 = 132

                         VAT X 14%

                         = 18.48

Luxury tax: A luxury tax of 15% is assessed on goods such as instant-print cameras, office machinery, photographic film, and luxury consumer goods such as cosmetics, home entertainment products, and motorcycles.  The tax is in addition to the VAT and is assessed on (FOB plus duty) times 15%.  (Use the formula listed above, but include a 15% uplift instead of 10% and 15% luxury tax instead of 14% VAT).  You can contact a customs broker or authorities for complete list of goods subject to luxury tax.

Customs Valuation:  The dutiable value of goods imported into South Africa and the Southern African Customs Union (SACU) is calculated on the FOB price in the country of export, in accordance with the GATT Customs Valuation Code. The value for customs duty purposes is the transaction value, the price actually paid or payable. In cases where the transaction value cannot be ascertained, the price actually paid for similar goods, adjusted for differences in cost and charges based on distance and mode of transport, is regarded as the transaction value. If more than one transaction value is ascertained, the lowest value applies. Alternatively, a computed value may be used based on production costs of the imported goods.

Tariffs

In keeping with its WTO commitments, the South African Government has sought to reform a complex tariff structure inherited from Apartheid-era governments. Over the last several years, the government has been quite successful in simplifying and reducing its overall tariff code such that the average tariff rate has fallen from a level in excess of 20 percent to just over 12 percent in just under three years. Nonetheless, as the Department of Trade and Industry pushes ahead with liberalizing policies, many industries previously protected by non-tariff barriers have sought to increase tariffs in their industry to GATT-binding levels. The government, however, has refused the majority of these tariff increase applications in favor of more WTO-friendly supply-side measures.

World Trade Organization (WTO) Commitments: As a result of both its market access commitments in the Uruguay Round and the government's attempts to reform its tariff structure, South Africa:

  • Has rationalized 9,580 tariff lines down to 7,182
  • Will bind 98 percent of its tariff lines to WTO binding levels by 2000, up from the 16 percent currently bound
  • Replace all remaining quantitative controls with ad valorem duties and make formula duties WTO-consistent
  • Cut back tariff lines from the 80 different levels of the past into six levels (with a few exceptions): 0 percent, 5 percent, 10 percent, 15 percent, 20 percent, and 30 percent

In the case of the automotive and textile industries, which the government considers sensitive, the process of gradual tariff reductions is on a longer schedule in order to give uncompetitive domestic producers a grace period in which to increase efficiency. Tariffs applied to original equipment components have been given eight years to fall from 100 percent to 30 percent. The target tariff for passenger and light commercial vehicles is 40 percent in 2002. Further subsequent phase-downs are also being considered. The tariffs for medium and heavy commercial vehicles will reach 20 percent by the year 2000. Textile tariffs will proceed over seven years from 100 percent to 45 percent on clothing, from 50 percent to 25 percent on fabrics, from 35 percent to 17.5 percent on yarn, from 15 percent to 10 percent on fibers, and from 60 percent to 30 percent on household textiles.

The Board on Tariffs and Trade is a statutory body that advises the Government on tariffs. The Board considers applications for both tariff relief and tariff protection and makes recommendations to the Minister of Trade and Industry. Applications are normally published for a period of six weeks for comments and consultation. The general trend has been for tariffs to be reduced to encourage industries to become more competitive and also to reduce cost structures. Although industries can still apply for tariff protection, such applications will be subject to rigorous analysis and evaluation in the context of industrial and agricultural policies.