Tax consultant on the new Covid-19 essential goods concession

07 April 2020 Consultancy.co.za

Tax Consulting SA reports that the new tax regulations implemented by the South African Revenue Services (SARS) as of March 25th this year present a challenge for the government, as they look to find the balance between speedy relief and preventing undue advantage. 

Part of the new regulatory policies is the exemption of VAT on essential goods which includes products that fall in the categories of food, cleaning & hygiene, medical, fuel and basic goods such as electricity. Vendors will also be eligible for a rebate in customs duty on these goods.

Jean du Toit of Tax Consulting SA explains how this exemption could encourage many businesses to diversify and make inroads into essential goods. However, the government has foreseen this and put extra checks in place, which is beneficial in a way but detrimental in another, according to du Toit.

Tax consultant on the new Covid-19 essential goods concession

“It is important to note that the importation of goods under this item in Schedule 1 is not unconditional. Businesses who wish to import these goods must obtain a certificate from the International Trade Administration Commission and may be subject to any further conditions agreed to by the Governments of the South Africa, Botswana, Lesotho and Swaziland,” explains du Toit.

The problem is that this extra check eats up time that is absolutely crucial in times of crisis. As people contend with the virus and the sea of economic and personal disruption it has caused, an additional bureaucratic hurdle to obtain tax rebates could be perceived as counterproductive.

Du Toit is among those who brand this as counterproductive, although he recognises the government’s position. “Whilst it is very difficult to avoid these issues, where there are hindrances in obtaining certificates for example, the impact of the relief is somewhat compromised,” he said.

The tax relief on essentials is among a number of financial policies that were introduced at the end of last month, not only to ease the burden on individuals at a time of crisis, but also to ensure that a degree of liquidity is maintained in the South African economy in the near future.


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