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Do you know what type of donated goods are Vat exempt?

by , 18 September 2013
Whenever you import goods, you have to pay Vat to Customs - sometimes this is called 'Customs Vat'. This is also applicable when you personally order something over the Internet from an overseas supplier. But, there are some exceptions. One, in particular, is the importing of donated goods, which is exempt from Vat. Read on to find out which donated goods qualify for exemption.

Do you import goods and always have to pay Vat and Customs duties? Did you know that some of those goods might be exempt from Vat?

That's right the Vat Act exempts certain donated goods that are coming to South Africa.

The Practical Vat Loose Leaf Service explains that this is because of the considerations prescribed by the International Trade Administration Commission.

Here's which donated goods qualify for exemption

To qualify for exemption, donated goods must be given to and received by:

  • A public authority;
  • A municipality; or
  • An Association not for Gain (nonprofits)

Keep in mind that SARS will only allow the exemption if it's satisfied the donated goods will be used by the Association not for Gain exclusively for:

  • Educational, religious or welfare purposes;
  • The furtherance of the association's objectives to provide educational, medical or welfare services, medical or scientific research; or issue to or treatment of poor or needy persons.

Another qualification is that the recipient of the donated goods must undertake that:

  • The goods are for the exclusive use of the organisation;
  • The goods will be distributed freely by the organisation;
  • The goods won't be sold, leased, hired or otherwise disposed of for gain; and
  • No consideration or other counter-performance will be accepted for the goods by any person.

The goods will be exempt if they're unsolicited.

As long as you don't stir the donors up, ask them earnestly, petition or beg them, the donation of the goods is considered to be unsolicited.

The goods must be forwarded free of charge. In other words, they must be a gift.

A word of caution: As wonderful as monetary gifts may be, for Vat purposes money isn't 'goods'.

Sometimes a nonresident donates money and the recipient organisation then uses it to buy something it needs. Unfortunately, that purchase of the needed goods is subject to Vat at the applicable (mostly standard) rate.

Only goods forwarded free of charge qualify for the exemption.

Who must send the donated goods to qualify for the exemption?

The person forwarding the goods must be a nonresident.

The Vat Act doesn't define a non-resident or resident. But, applying the everyday use of the term 'nonresident,' the donor must be someone who doesn't live permanently in South Africa.

Another good indicator of their resident status is whether or not they're registered as a South African taxpayer.

How do I apply for the Vat exemption on imported donated goods?

There's no prescribed application form for this exemption. You'll simply apply by sending a letter to SARS.

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