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Why we pay rsa & botswana vat

JONATHAN HORE

A lot of us, including companies purchase goods from South Africa, hereinafter RSA. When we collect those goods from RSA, we get charged RSA VAT and then the same goods also suffer Botswana VAT on importation. However, when the RSA suppliers deliver or consign the goods via rail, mail or courier, no RSA VAT is charged.
 

I want to analyse why VAT is payable in these different scenarios. I will focus my attention on the reasons why we pay RSA and Botswana VAT on the same goods whilst we belong to the same Customs Union, the Southern African Customs Union (SACU). In this article, words importing the masculine shall include the feminine.

RSA VAT

RSA traders are, as is practice wherever VAT is applicable, required to charge VAT on taxable goods. However, if they export the goods from RSA, then such goods may be chargeable to VAT at 0%, as they will be considered to be exports. In general, exportations of goods attract VAT at 0%, which makes them cheaper to the buyer than if VAT was charged on them.

For example, if goods costing R 100 000 are exported, then their cost will remain at R 100 000. However, if the goods do not qualify as exports chargeable to VAT at 0%, then they will cost R 115 000, inclusive of the RSA VAT of R 15 000. Consequently, they become more expensive to the Botswana buyer, on face value.

But why is it that some goods are subjected to RSA VAT whilst some are not? Well, RSA traders can only charge VAT at 0% if they are positive that they will obtain exportation documents sufficient to prove that the goods left RSA and then crossed into Botswana. Internationally, goods need to be cleared for Customs purposes before they leave or enter a country, through a Customs document known as a bill of entry.

The only way in which RSA traders can prove that goods which left RSA by road later entered Botswana is when they have two bills of entry, i.e. the RSA bill of entry (export) and the Botswana bill of entry (import). The RSA traders can only be certain that they will have both bills of entry if they are the ones delivering the goods to Botswana by road or when the consign them via rail, courier or air. It is only then that they can charge VAT at 0% to Botswana residents. If they are not certain that goods will leave RSA, they then charge VAT at 15%, making them more expensive to the buyer, again, on face value.

If a Botswana-based person travels to RSA or sends someone to collect goods, the RSA traders won’t be sure that the goods will actually leave RSA, which means that they can’t apply the 0% on the sale; they rather charge VAT at 15%. This is the main reason why we get charged RSA VAT when we cross the border to collect the goods. It also explains why we do not suffer RSA VAT when the traders deliver the goods here by road. In such cases, they will be able to obtain two bills of entry.

As stated above, the RSA traders can also charge VAT at 0% when they consign the goods to Botswana. The RSA VAT is however claimable from SARS through the SARS refund administrator’s office based in Gaborone and this explains my ‘on face value’ clauses above. This means that the goods which cost R 115 000 as stated above will effectively cost the importer R 100 000, when the VAT refund is processed.

BOTSWANA VAT

Despite the fact that goods may have suffered RSA VAT, they will also be subjected to Botswana VAT at the time of importation on the equivalence of R 100 000, per the example above. VAT is territorial and is charged in each country when taxable goods are imported. The fact that Botswana and RSA belong to the same Customs Union does not affect VAT as SACU only impacts Customs duties.

The Botswana VAT is however not a cost to VAT-registrants as they can claim it from BURS through VAT returns, if the VAT is not prohibited. However, the Botswana VAT becomes a cost to Botswana importers if they are not registered for VAT. This is because VAT is naturally borne by the final consumer of the goods, being the ordinary man on the street, non-VAT registered businesses and government.

CONCLUSION

As has been noted above, imports from RSA may suffer both RSA and Botswana VAT but the RSA VAT can be claimed back, which makes it not to be a cost to the importer. It is however key to ascertain the documents that need to be availed to the SARS VAT refunds administrator before importation is done, to avoid rejection of VAT claims.

Further, Botswana VAT is only a cost to non-VAT registrants whilst VAT-registrants can claim it back. So, if you want to avoid the cashflow implications arising from paying both RSA and Botswana VAT, then try to get the RSA traders to arrange their own transportation or consign the goods in order for them to charge VAT at 0%.  

Well folks, I hope that was insightful. As Yours Truly says goodbye, remember to pay to Caesar what belongs to him. If you want to join our Tax Whatsapp group, send me a text on the cell number below. Jonathan Hore is the Managing Tax Consultant of Aupracon Tax Specialists and feedback can be relayed to jhore@aupracontax.co.bw or 7181 5836. This article is of a general nature and is not meant to address particular matters of any person.

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Export Processing Zones: How to Get SEZA to Sizzle

23rd September 2020
Export Processing Zone (EPZ) factory in Kenya

In 2005, the Business & Economic Advisory Council (BEAC) pitched the idea of the establishment of Special Economic Zones (SEZs) to the Mogae Administration.

It took five years before the SEZ policy was formulated, another five years before the relevant law was enacted, and a full three years before the Special Economic Zones Authority (SEZA) became operational.

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Egypt Bagged Again

23rd September 2020
Samson

… courtesy of infiltration stratagem by Jehovah-Enlil’s clan

With the passing of Joshua’s generation, General Atiku, the promised peace and prosperity of a land flowing with milk and honey disappeared, giving way to chaos and confusion.

Maybe Joshua himself was to blame for this shambolic state of affairs. He had failed to mentor a successor in the manner Moses had mentored him. He had left the nation without a central government or a human head of state but as a confederacy of twelve independent tribes without any unifying force except their Anunnaki gods.

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‘RO, ‘RO ‘RO YOUR ‘BOT

23rd September 2020

If I say the word ‘robot’ to you,  I can guess what would immediately spring to mind –  a cute little Android or animal-like creature with human or pet animal characteristics and a ‘heart’, that is to say to say a battery, of gold, the sort we’ve all seen in various movies and  tv shows.  Think R2D2 or 3CPO in Star Wars, Wall-E in the movie of the same name,  Sonny in I Robot, loveable rogue Bender in Futurama,  Johnny 5 in Short Circuit…

Of course there are the evil ones too, the sort that want to rise up and eliminate us  inferior humans – Roy Batty in Blade Runner, Schwarzenegger’s T-800 in The Terminator,  Box in Logan’s Run,  Police robots in Elysium and  Otomo in Robocop.

And that’s to name but a few.  As a general rule of thumb, the closer the robot is to human form, the more dangerous it is and of course the ultimate threat in any Sci-Fi movie is that the robots will turn the tables and become the masters, not the mechanical slaves.  And whilst we are in reality a long way from robotic domination, there are an increasing number of examples of  robotics in the workplace.

ROBOT BLOODHOUNDS Sometimes by the time that one of us smells something the damage has already begun – the smell of burning rubber or even worse, the smell of deadly gas. Thank goodness for a robot capable of quickly detecting and analyzing a smell from our very own footprint.

A*Library Bot The A*Star (Singapore) developed library bot which when books are equipped with RFID location chips, can scan shelves quickly seeking out-of-place titles.  It manoeuvres with ease around corners, enhances the sorting and searching of books, and can self-navigate the library facility during non-open hours.

DRUG-COMPOUNDING ROBOT Automated medicine distribution system, connected to the hospital prescription system. It’s goal? To manipulate a large variety of objects (i.e.: drug vials, syringes, and IV bags) normally used in the manual process of drugs compounding to facilitate stronger standardisation, create higher levels of patient safety, and lower the risk of hospital staff exposed to toxic substances.

AUTOMOTIVE INDUSTRY ROBOTS Applications include screw-driving, assembling, painting, trimming/cutting, pouring hazardous substances, labelling, welding, handling, quality control applications as well as tasks that require extreme precision,

AGRICULTURAL ROBOTS Ecrobotix, a Swiss technology firm has a solar-controlled ‘bot that not only can identify weeds but thereafter can treat them. Naio Technologies based in southwestern France has developed a robot with the ability to weed, hoe, and assist during harvesting. Energid Technologies has developed a citrus picking system that retrieves one piece of fruit every 2-3 seconds and Spain-based Agrobot has taken the treachery out of strawberry picking. Meanwhile, Blue River Technology has developed the LettuceBot2 that attaches itself to a tractor to thin out lettuce fields as well as prevent herbicide-resistant weeds. And that’s only scratching the finely-tilled soil.

INDUSTRIAL FLOOR SCRUBBERS The Global Automatic Floor Scrubber Machine boasts a 1.6HP motor that offers 113″ water lift, 180 RPM and a coverage rate of 17,000 sq. ft. per hour

These examples all come from the aptly-named site www.willrobotstakemyjob.com    because while these functions are labour-saving and ripe for automation, the increasing use of artificial intelligence in the workplace will undoubtedly lead to increasing reliance on machines and a resulting swathe of human redundancies in a broad spectrum of industries and services.

This process has been greatly boosted by the global pandemic due to a combination of a workforce on furlough, whether by decree or by choice, and the obvious advantages of using virus-free machines – I don’t think computer viruses count!  For example, it was suggested recently that their use might have a beneficial effect in care homes for the elderly, solving short staffing issues and cheering up the old folks with the novelty of having their tea, coffee and medicines delivered by glorified model cars.  It’s a theory, at any rate.

Already, customers at the South-Korean  fast-food chain No Brand Burger can avoid any interaction with a human server during the pandemic.  The chain is using robots to take orders, prepare food and bring meals out to diners.  Customers order and pay via touchscreen, then their request is sent to the kitchen where a cooking machine heats up the buns and patties. When it’s ready, a robot ‘waiter’ brings out their takeout bag.   

‘This is the first time I’ve actually seen such robots, so they are really amazing and fun,’ Shin Hyun Soo, an office worker at No Brand in Seoul for the first time, told the AP. 

Human workers add toppings to the burgers and wrap them up in takeout bags before passing them over to yellow-and-black serving robots, which have been compared to Minions. 

Also in Korea, the Italian restaurant chain Mad for Garlic is using serving robots even for sit-down customers. Using 3D space mapping and other technology, the electronic ‘waiter,’ known as Aglio Kim, navigates between tables with up to five orders.  Mad for Garlic manager Lee Young-ho said kids especially like the robots, which can carry up to 66lbs in their trays.

These catering robots look nothing like their human counterparts – in fact they are nothing more than glorified food trolleys so using our thumb rule from the movies, mankind is safe from imminent takeover but clearly  Korean hospitality sector workers’ jobs are not.

And right there is the dichotomy – replacement by stealth.  Remote-controlled robotic waiters and waitresses don’t need to be paid, they don’t go on strike and they don’t spread disease so it’s a sure bet their army is already on the march.

But there may be more redundancies on the way as well.  Have you noticed how AI designers have an inability to use words of more than one syllable?  So ‘robot’ has become ‘bot’ and ‘android’ simply ‘droid?  Well, guys, if you continue to build machines ultimately smarter than yourselves you ‘rons  may find yourself surplus to requirements too – that’s ‘moron’ to us polysyllabic humans”!

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