Online purchases can cost more than you expect due to duty and VAT charges calculated on internet purchases.
By Ashleigh Brown, journalist, Justmoney
Finding goods online that are either cheaper than in the stores locally, or that cannot even be found in our own shops is rewarding and exciting. But customers often don’t realise the extra costs involved with making purchases from overseas.
When buying goods online, the overall costs can amount to more than the customer initially intended. This is due to the custom duties and taxes customers have to pay on the parcel to retrieve it from the post office.
“The duty and Vat on Internet purchases are calculated exactly in the same manner as duty and Vat on any other products imported into the RSA by any other means of transport,” said Marika Muller, deputy spokesperson of the South African Revenue Service (SARS).
SA method of calculating costs
South Africa has a certain method to calculate the collection costs on parcels. “The valuation method is FOB (Free on Board), which means that the import duty and taxes payable are calculated exclusively on the value of the imported goods,” said the Duty Calculator
website.
“It is also important to note that some of these costs (duty) are calculated based on the value of the product in South Africa, and not what might have originally been paid for the item overseas,” said Muller.
There are no set price lists on the SARS website explaining how collection fees are calculated. Furthermore, there are no calculators or tables to help customers work out how much the end price will be for their package. This makes it difficult for a customer to work out what they could pay.
However, Muller said that customers can get a “general” idea of how much their parcel will come to by visiting their nearest post office. “People receiving parcels from overseas could theoretically check the VAT and duty costs with their local post office (or indeed the SARS team at the OR Tambo Mail Centre), but there are so many variables that no calculation would be final and absolute – especially given currency fluctuations. At best you would be able to get a general idea,” said Muller.
Duty rates in South Africa vary from 0% to 45%, with an average duty rate of 18.74%. Some goods are not subject to duty (e.g. laptops, electric guitars and other electronic products) according to the Duty Calculator.
“Customs Charges” include duty which depends on what is in the parcel and not how big the parcel is, explained Muller. Furthermore, VAT is charged at an added tax value, and not at a straight 14%. “Added tax value is calculated as 14% of customs value + 10% thereof + the customs duty amount,” said Muller.
More than R400
“A person can receive two gifts per calendar year, of which the value must not exceed R400 for each parcel,” explains the SARS
website.
Therefore, if gifts which are sent from overseas value more than R400, customers on this side will still have to pay postage collection fees.
At the current exchange rate, parcels priced at US$36.52, £22.69, or €28.76 will be subject to custom charges. This includes a duty which is the percentage charge of which depends on what is in the parcel and VAT charged at an added tax value, and not at a straight 14%.
However, for gifts that are valued at less than R400, customers are exempt from Customs fees. This is unless they are wines, spirits, tobacco (including cigarettes and cigars) or perfume. In which cases customers still have to pay to aforementioned fees.
Customers should check with their nearest post office for a general price on how much the collection fees on their item will be. Sometimes it is cheaper to wait for the item to come to South Africa than pay for all the extras.
