Who may claim input VAT on imports: The principal or the agent?
Who may claim input VAT on imports: The principal or the agent?
By Ayanda Sithole, Junior Consultant
In Appellant Southern Africa (Pty) Ltd v Commissioner for the South African Revenue Service (VAT 22315) [2025] ZATC 5 (25 April 2025), the Tax Court of South Africa considered whether a clearing and forwarding agent may claim input VAT on the importation of goods where it facilitated payment of the import VAT on behalf of its principal.
The judgment provides important guidance on the application of section 54 of the Value-Added Tax Act 89 of 1991 (“the VAT Act”) and reinforces the principle that VAT consequences are determined by statute, rather than by the parties’ practical involvement in a transaction.
Factual background
Southern Africa (Pty) Ltd (“the appellant”) appealed against an assessment issued by the Commissioner for the South African Revenue Service (“SARS”) in respect of approximately R26.9 million in VAT. The dispute arose from the appellant’s attempt to claim an input tax deduction for VAT paid on the importation of goods.
The appellant is a South African company that operates as a clearing and forwarding agent, licensed in terms of section 64B of the Customs and Excise Act 91 of 1964 (“the CEA”). It was appointed by BIV Gold (Pty) Ltd (“BIV”) to facilitate the importation of gold coins from the United Kingdom into South Africa.
BIV purchased 9 000 gold coins in the United Kingdom. The coins were imported on 3 October 2018 under a bill of entry through OR Tambo International Airport. In performing its mandate, the appellant submitted a SAD 500 (bill of entry) in respect of the goods; however, no VAT was declared on the form.
SARS accordingly detained the goods pending payment of VAT and raised an import VAT liability of R26 091 846. SARS notified the appellant via the Electronic Data Interchange (EDI) system and required the submission of a Voucher of Correction (VOC) to account for the import VAT. The appellant submitted the VOC on 5 October 2018, after which the goods were released.
On 10 October 2018, One & Co, the supplier of the gold coins, requested that the gold coins be returned to the United Kingdom. On 12 October 2018, BIV issued a “return invoice” to one Baird, reflecting that the coins were to be returned, and the appellant was instructed by BIV, the principal, to export them on 24 October 2018. The appellant attempted to submit a further VOC to cancel the original customs declaration, but SARS rejected the submission. On 31 October 2018, SARS deducted import VAT of R26 091 845.85 from the appellant’s deferment account. On 9 May 2019, the appellant claimed the same amount as an input tax deduction for the 04/2019 tax period. Following verification, SARS disallowed the input tax claim and issued a notice of assessment on 20 June 2019.
The issue before the court
The appellant took the matter to the Tax Court arguing that they were the representative taxpayer of BIV and, therefore, should be entitled to claim the input VAT. Additionally, they contended that there was no importation into the Republic, as the importation of the goods was not finalized, the goods had not been entered for home consumption, and they were subsequently exported. Lastly, they argued that an import should be considered a supply of goods and services and therefore the export of the goods constituted a cancellation of such supply.
The Court’s Decision
In summary, the court dismissed the appellant’s appeal and held that the appellant was not entitled to claim the input VAT.
Application of Section 54 of the VAT Act
The court considered the appellant’s arguments and found that section 54 of the VAT Act was applicable in this case instead of sections 153 and 158 of the Tax Administration Act (“the TAA”), that respectively deal with “representative taxpayers” and “responsible third parties”. The court further held that an importation did in fact occur, that the goods were entered into the Republic for home consumption, and that the import and export of the same goods are treated as separate transactions.
The appellant’s argument that it qualified as a representative taxpayer in terms of the TAA was accordingly rejected. The court held that these provisions are of a general nature, whereas section 54 of the VAT Act specifically governs the relationship between agents and principals in the context of importation. Furthermore, the appellant was never held liable as a representative taxpayer or responsible third party.
In terms of section 54 of the VAT Act, when an agent imports goods on behalf of a principal, the importation is deemed to have been made by the principal, regardless of whose name appears on the customs documentation. Accordingly, although the appellant facilitated the importation and its name appears on the documents, the importation was legally attributed to BIV, and only BIV was entitled to claim the input VAT.
Importation and Home Consumption
In considering whether an importation had occurred, the court acknowledged that the term “importation” is not defined in the VAT Act. However, it relied on section 10 of the CEA to determine when an importation is deemed to occur. The court clarified that, in terms of this provision, the gold coins were imported by BIV when the aircraft entered the control area of OR Tambo International Airport on 3 October 2018. Accordingly, an importation did in fact occur.
The court further held that the completion of the SAD 500 and the Voucher of Correction (VOC), together with the use of a purpose code for home consumption, constituted sufficient proof that the goods were entered for home consumption. In addition, the forms completed by the appellant recorded the goods as gold coins, reflected their value, and listed South Africa as the final destination, further indicating that the goods were intended for home consumption. Witness 1, who testified on behalf of the appellant, confirmed this position, thereby undermining the appellant’s argument that no importation had occurred.
In addition, Witness 3, who testified for the Commissioner, stated that a paperless release of the goods was processed through the EDI system on 11 October 2018. Accordingly, the court found that there could be no doubt that an importation had occurred and that the goods had been entered for home consumption.
The court found that, by submitting the SAD 500 and the Voucher of Correction (VOC) which resulted in the release of the gold coins, an importation had occurred. The subsequent export of the goods to the United Kingdom constituted a separate transaction, as the coins had already been imported and South Africa was reflected as their final destination in the customs documentation.
Following its findings, the court referred to section 16 of the VAT Act to clarify that, in order for the appellant to claim input VAT, the relevant import documentation must be in its name and the VAT number declared must belong to the claimant. In this case, however, both the documentation and the VAT number were in BIV’s name, as BIV was the importer and the appellant acted merely as an agent. Accordingly, the court concluded that the appellant had no entitlement to claim the input VAT.
The appellant sought to argue that the provisions of section 21 of the VAT Act led to illogical and arbitrary results, and that the law treated taxpayers unfairly and inconsistently. However, the court held that this argument was raised for the first time in the appellant’s heads of argument and had not been properly pleaded. As a result, the argument could not be considered.
The court emphasised that a constitutional challenge must be clearly and properly raised from the outset, so that the opposing party is aware of the case it must meet. In support of this principle, the court referred to the decision in Minister of Cooperative Governance and Traditional Affairs v De Beer and Another (Case no 538/2020) [2021] ZASCA 95 (1 July 2021), paragraphs 95-96.
Key Principles from the Judgment
The judgment confirms several important principles:
The court ultimately dismissed the appeal and ordered the appellant to pay the respondent’s costs. The judgment confirms that, in the context of importation, the principal — and not the clearing agent — is regarded as the importer for VAT purposes and is therefore the only party entitled to claim input VAT. This case serves as an important reminder that VAT consequences are determined by statutory provisions rather than the practical involvement of parties in a transaction.
In Appellant Southern Africa (Pty) Ltd v Commissioner for the South African Revenue Service (VAT 22315) [2025] ZATC 5 (25 April 2025), the Tax Court of South Africa considered whether a clearing and forwarding agent may claim input VAT on the importation of goods where it facilitated payment of the import VAT on behalf of its principal.
The judgment provides important guidance on the application of section 54 of the Value-Added Tax Act 89 of 1991 (“the VAT Act”) and reinforces the principle that VAT consequences are determined by statute, rather than by the parties’ practical involvement in a transaction.
Factual background
Southern Africa (Pty) Ltd (“the appellant”) appealed against an assessment issued by the Commissioner for the South African Revenue Service (“SARS”) in respect of approximately R26.9 million in VAT. The dispute arose from the appellant’s attempt to claim an input tax deduction for VAT paid on the importation of goods.
The appellant is a South African company that operates as a clearing and forwarding agent, licensed in terms of section 64B of the Customs and Excise Act 91 of 1964 (“the CEA”). It was appointed by BIV Gold (Pty) Ltd (“BIV”) to facilitate the importation of gold coins from the United Kingdom into South Africa.
BIV purchased 9 000 gold coins in the United Kingdom. The coins were imported on 3 October 2018 under a bill of entry through OR Tambo International Airport. In performing its mandate, the appellant submitted a SAD 500 (bill of entry) in respect of the goods; however, no VAT was declared on the form.
SARS accordingly detained the goods pending payment of VAT and raised an import VAT liability of R26 091 846. SARS notified the appellant via the Electronic Data Interchange (EDI) system and required the submission of a Voucher of Correction (VOC) to account for the import VAT. The appellant submitted the VOC on 5 October 2018, after which the goods were released.
On 10 October 2018, One & Co, the supplier of the gold coins, requested that the gold coins be returned to the United Kingdom. On 12 October 2018, BIV issued a “return invoice” to one Baird, reflecting that the coins were to be returned, and the appellant was instructed by BIV, the principal, to export them on 24 October 2018. The appellant attempted to submit a further VOC to cancel the original customs declaration, but SARS rejected the submission. On 31 October 2018, SARS deducted import VAT of R26 091 845.85 from the appellant’s deferment account. On 9 May 2019, the appellant claimed the same amount as an input tax deduction for the 04/2019 tax period. Following verification, SARS disallowed the input tax claim and issued a notice of assessment on 20 June 2019.
The issue before the court
The appellant took the matter to the Tax Court arguing that they were the representative taxpayer of BIV and, therefore, should be entitled to claim the input VAT. Additionally, they contended that there was no importation into the Republic, as the importation of the goods was not finalized, the goods had not been entered for home consumption, and they were subsequently exported. Lastly, they argued that an import should be considered a supply of goods and services and therefore the export of the goods constituted a cancellation of such supply.
The Court’s Decision
In summary, the court dismissed the appellant’s appeal and held that the appellant was not entitled to claim the input VAT.
Application of Section 54 of the VAT Act
The court considered the appellant’s arguments and found that section 54 of the VAT Act was applicable in this case instead of sections 153 and 158 of the Tax Administration Act (“the TAA”), that respectively deal with “representative taxpayers” and “responsible third parties”. The court further held that an importation did in fact occur, that the goods were entered into the Republic for home consumption, and that the import and export of the same goods are treated as separate transactions.
The appellant’s argument that it qualified as a representative taxpayer in terms of the TAA was accordingly rejected. The court held that these provisions are of a general nature, whereas section 54 of the VAT Act specifically governs the relationship between agents and principals in the context of importation. Furthermore, the appellant was never held liable as a representative taxpayer or responsible third party.
In terms of section 54 of the VAT Act, when an agent imports goods on behalf of a principal, the importation is deemed to have been made by the principal, regardless of whose name appears on the customs documentation. Accordingly, although the appellant facilitated the importation and its name appears on the documents, the importation was legally attributed to BIV, and only BIV was entitled to claim the input VAT.
Importation and Home Consumption
In considering whether an importation had occurred, the court acknowledged that the term “importation” is not defined in the VAT Act. However, it relied on section 10 of the CEA to determine when an importation is deemed to occur. The court clarified that, in terms of this provision, the gold coins were imported by BIV when the aircraft entered the control area of OR Tambo International Airport on 3 October 2018. Accordingly, an importation did in fact occur.
The court further held that the completion of the SAD 500 and the Voucher of Correction (VOC), together with the use of a purpose code for home consumption, constituted sufficient proof that the goods were entered for home consumption. In addition, the forms completed by the appellant recorded the goods as gold coins, reflected their value, and listed South Africa as the final destination, further indicating that the goods were intended for home consumption. Witness 1, who testified on behalf of the appellant, confirmed this position, thereby undermining the appellant’s argument that no importation had occurred.
In addition, Witness 3, who testified for the Commissioner, stated that a paperless release of the goods was processed through the EDI system on 11 October 2018. Accordingly, the court found that there could be no doubt that an importation had occurred and that the goods had been entered for home consumption.
The court found that, by submitting the SAD 500 and the Voucher of Correction (VOC) which resulted in the release of the gold coins, an importation had occurred. The subsequent export of the goods to the United Kingdom constituted a separate transaction, as the coins had already been imported and South Africa was reflected as their final destination in the customs documentation.
Following its findings, the court referred to section 16 of the VAT Act to clarify that, in order for the appellant to claim input VAT, the relevant import documentation must be in its name and the VAT number declared must belong to the claimant. In this case, however, both the documentation and the VAT number were in BIV’s name, as BIV was the importer and the appellant acted merely as an agent. Accordingly, the court concluded that the appellant had no entitlement to claim the input VAT.
The appellant sought to argue that the provisions of section 21 of the VAT Act led to illogical and arbitrary results, and that the law treated taxpayers unfairly and inconsistently. However, the court held that this argument was raised for the first time in the appellant’s heads of argument and had not been properly pleaded. As a result, the argument could not be considered.
The court emphasised that a constitutional challenge must be clearly and properly raised from the outset, so that the opposing party is aware of the case it must meet. In support of this principle, the court referred to the decision in Minister of Cooperative Governance and Traditional Affairs v De Beer and Another (Case no 538/2020) [2021] ZASCA 95 (1 July 2021), paragraphs 95-96.
Key Principles from the Judgment
The judgment confirms several important principles:
- The principal is the importer
Where goods are imported by an agent on behalf of a principal, the importation is deemed to be made by the principal in terms of section 54 of the VAT Act. - Import VAT is distinct from supply VAT
VAT on importation (section 7(1)(b)) operates independently from VAT on the supply of goods and services (section 7(1)(a)). - Importation occurs upon entry into the Republic
In terms of the CEA, goods are deemed to be imported when they enter the Republic, regardless of subsequent events. - Entry for home consumption is determined by declaration
The completion of customs documentation, including the SAD 500 with a home consumption code, is sufficient to establish entry for home consumption. - Import and export are separate transactions
The subsequent export of goods does not reverse or negate a prior importation. - Documentation determines entitlement
Only the party reflected as importer on valid documentation may claim input VAT.
The court ultimately dismissed the appeal and ordered the appellant to pay the respondent’s costs. The judgment confirms that, in the context of importation, the principal — and not the clearing agent — is regarded as the importer for VAT purposes and is therefore the only party entitled to claim input VAT. This case serves as an important reminder that VAT consequences are determined by statutory provisions rather than the practical involvement of parties in a transaction.