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International sales tax and SA Customs VAT calculation (imported goods)

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Suppose a purchase is made in the USA, and shipped to a local (USA) forwarding depot (for forwarding to SA) : under these circumstances sales tax is due in the USA on items shipped to a local USA destination. Is this tax value supposed to be excluded or included in the SA Customs VAT / Duty calculation on arrival of the item in SA ? 


You purchase a $100 item in the USA and ship it to the closest freight-forwarder there. The local (USA) destination incurrs 8.8% sales tax ($8.8) which is disclosed in the billing/invoice which you have paid. The item is then forwarded to SA and subjected to SA Customs Duty and Excise. Is the sales tax paid at the international destination ($8.8 in the USA) included or excluded in the SA Customs / VAT / Duty calculation ?  (Discuss for 15 marks).


I tried this before, but you need to convince the vendor upfront that it is for export. I never got this right if the parcel was sent to a forwarder, as there is scope for tax fraud.

Tax paid at origin has no bearing on the ZA tax code, if understood correctly and from experience.


@ScottulusMaximus will know.

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The USA has no federal sales tax HOWEVER all but 5 of the states charges state sales tax.
When goods are shipped to a forwarding location outside of that state's border, the vendor may include the delivery state's sales tax - the way that this works differs from state to state.
In order to determine the sales tax that you will be charged, you would need to determine the state that the vendor you buy it from is located in, what state the forwarding location is in and, if these are two different states what that vendor's state policy is around sales taxes on across state line sales.

The USA does not charge sales tax on exports. Generally the ship to location is used to determine if it is an export. In your case, it is a local USA sale as the invoice's ship to location will be the forwarding location in the USA.

When the goods arrive in SA import duties and import VAT will be calculated on the landed cost. In SA landed cost is based on Free on Board costing, so the landed cost consists of the invoice amount, freight, insurance and other charges to get it to its final destination.

It is a general trade principle not to calculate tax on tax. In your case, the invoice value will indicate the state sales tax but this should be excluded from the invoice amount for landed cost purposes.

*disclaimer: I'm just an accountant not a global trade expert. The above is a principle based explanation and I am pretty sure that it is correct.

^Tip: Buy from a vendor located in one of the sales tax free states and make sure that the forwarding location is in that same state. In the case there will be no sales tax on your purchase.

Years ago I got an amp part from a vendor in Falstaff, Arizona.  The invoice showed the sales tax as a separate item and the DA50 based the CIF value on the pre-tax $ price

I just assumed that this was the normal way CIF values are calculated

The last 3 shipments from Parts Express do not even mention sales tax, so I presume that this was not charged.  Local sales In Dayton, Ohio attract 9% sales tax


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