by John Henning

Following announcement of the actions taken by government to combat the Covid-19 crisis, many South Africans may be aware of the proposed tax measures that are effective from 1 April 2020. 

There is, however, an additional fiscal measure under the Value-Added Tax Act No. 89 of 1991 (VAT Act) that has been implemented that may have gone unnoticed, said Jean du Toit, tax attorney at Tax Consulting SA. 

Our analysis on fiscal relief measures initially proposed, stressed the importance of bringing the VAT system into the equation, albeit in a different context, said du Toit. 

When the Regulations under the Disaster Management Act No. 57 of 2002 were published on 25 March 2020, it effectively made provision for this exemption by providing for the definition of “essential goods”, which include: 

Food – Any food product, including non -alcoholic beverages; animal food; and chemicals, packaging and ancillary products used in the production of any food product. 

Cleaning and hygiene products – Toilet paper, sanitary pads, sanitary tampons, condoms; hand sanitizer, disinfectants, soap, alcohol for industrial use, household cleaning products, and personal protective equipment; and chemicals, packaging and ancillary products used in the production of these items. 

Medical – Medical and hospital supplies, equipment and personal protective equipment; and chemicals, packaging and ancillary products used in the production of any of the above. 

Fuel – including coal and gas. 

Basic goods – including airtime and electricity. 

SARS announced on 27 March that items falling within this definition will fall under Item 412.11 of Schedule 1 to the VAT Act. Schedule 1 must be read with section 13(3) of the VAT Act, which provides for the exemption. 

There will also be a full rebate of customs duty in terms of item 412.11 of Schedule 4 of the Customs and Excise Act No. 94 of 1964. 

This initiative should stimulate the importation of essential goods, whilst providing much needed relief for vendors who would not be required to pay input VAT to SARS, said du Toit. 

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