SOUTH AFRICAN REVENUE SERVICE
MEDIA RELEASE NUMBER 6 OF 1998

26 AUGUST 1998

COMMENCEMENT OF VAT COLLECTIONS AT LAND BORDER POSTS - PROJECT BIYA

Cabinet announced last year that it had approved that the number of land border posts which may be used to import and export commercial goods was going to be reduced to 19. The remaining posts will be used for non-commercial purposes and will be staffed by Home Affairs (Immigration) and SAPS (Border Police).

The logistics are now well in place and the commencement of VAT collection will begin on 1 October 1998 at the designated Namibian and Botswana Border Posts and the Swaziland and Lesotho Border Posts on 1 November 1998. Houses and the basic infrastructure have been erected at the designated border posts in a rapid deployment programme. Staff have been and are being appointed and trained for the border posts. The necessary computer equipment has been installed and arrangements have been made with SAPS to share their network.

This decision to canalise the movement of commercial goods has major advantages in a number of areas.

• It will be possible to collect VAT on the goods imported through these border posts. It has been found presently that where goods are not subject to VAT at the time of importation, the goods are often traded in underground markets and no tax is ever collected on the sales.
• The fraudulent misuse of the VAT export scheme can be more tightly controlled. Vendors requesting VAT export refunds will be required to produce the goods and documentation to support the export at one of the commercial Land Border Posts to qualify for a refund. The movement of control to the Border is a significant enforcement measure that will clamp down on fraudulent exporters seeking illegal refunds.
• It will be the first time that SARS Customs Officers are present at all the Land Border Posts through which goods are imported and exported and will allow proper control over the cross-border movement of commercial goods, effect improved enforcement of anti-smuggling measures, etc.
• It will be possible to collect meaningful statistics of imports and exports through the Land Border Posts.

SARS policy, legislation and procedures are nearing the final stages. Discussions with the BLNS countries and South African role players will be finalised on 25, 26 and 27 August 1998. A revised CCA1 (common customs area) form will be available for use after final negotiations with the BLNS Administrations, but it is envisaged that use of the revised CCA1 form will only be mandatory from 15 January 1999.

Some features and aspects of the deployment operation and scheme are:

• Almost 90% of the commercial traffic between South Africa and the BLNS countries pass through the designated border posts according to a survey done by the Department of Transport. This should minimise the disruption caused by the canalising of commercial traffic through the designated border posts and any criticism there might be.
• The Border Police and Home Affairs officials will ensure that commercial traffic is not allowed through non-designated border posts.
• A policy has been formulated in the National Interdepartmental Structure in terms of which commercial traffic may pass through a non-designated border post in exceptional circumstances. An example would be where a business is situated close to a non-designated border post and would have to travel hundreds of kilometres to pass through a designated post. In these circumstances a concession will be granted through NIDS and the Border Police or Home Affairs will perform the customs function. One of the reasons why the dates of 1 October and 1 November 1998 were chosen was to give persons the opportunity to apply for the concessions.
• The VAT Refund Administrators have been requested to extend their services from the airports, harbours, Beit Bridge and Lebombo to all the new border posts. The tender in terms of which they were appointed provides for this. The benefit will be that private foreign persons who purchase goods in South Africa and remove them from South Africa will be able to claim a refund of their VAT. This will resolve the complaints that South Africa discriminates against BLNS residents as compared to international visitors.
• It will also have the major advantage that the VAT export incentive scheme in terms of which South African vendors refund VAT to BLNS traders who purchase goods in South Africa and remove them to the BLNS countries can be stopped. This potentially can save South Africa hundreds of millions of rands and bring order to the distribution chains in South Africa which have been disrupted by the VAT fraud.

List of designated posts:

Botswana

• Groblersburg
• Kopfontein
• Ramatlabama
• Skilpadshek

Lesotho

• Caledonspoort
• Ficksburg Bridge
• Maseru Bridge
• Qachasnek
• Van Rooyens Hek

Namibia

• Narogas
• Vioolsdrift

Swaziland

• Golela
• Jeppes Reef
• Mahamba
• Mananga
• Nerston
• Oshoek

ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE
PRETORIA

Contact persons:

Robert Sandla
Tel:(012) 314-9798
Fax:(012) 325-7992