Import VAT exemption on certain feed products

The Namibia Agricultural Union (NAU) approached the department of inland revenue to exempt certain animal feed products by Namibian farmers from import value-added tax (VAT).

Inland Revenue replied that goods imported under rebate item 412.11, paragraph 2(g)(i) of Schedule V to the Value Added Tax Act (Act No. 10 of 2000), as amended (the VAT Act), may qualify for exemption from VAT on importation.

The mentioned rebate item reads: “Goods imported (1) for the relief of distress of persons in cases of famine or other natural disaster.” Inland Revenue confirmed that the exemption would be applied in view of the prevailing drought conditions and consequent state of emergency declared by president Hage Geingob earlier.

The exemption will be administered by the customs and excise department. Customs is responsible for the collection and recording of import VAT on behalf of Inland Revenue on the collection of import VAT in terms of section 14(5) and (6) of the VAT Act.

Who qualifies for the exemption?

Customs confirmed that the import VAT exemption applies to individual farmers (communal and commercial farmers) in all regions of Namibia importing animal feed products directly for own use and not for resale.

It is important to note that the exemption will only apply on importation and not when buying animal feed products in Namibia from registered suppliers. In the last mentioned instance, VAT will still be payable at the standard rate of 15%.

Which products may be imported exempted from VAT?

Customs confirmed that the following products fall under the exemption:

(a) Roughage: Lucerne, grass-teff and other wheat straw, oats straw/hay, maize hay, sorghum hay and silage;

(b) Energy and protein concentrates: Cotton oil cake, sunflower oil cake, maize chop, wheat bran, soya oil cake, full fat soya, maize meal, whole maize kernels, molasses, wheat, barley, oats, sunflower hulls, whole cotton seed and maize bran.

Where may application be made for exemption from import VAT on the above products?

Application should be made at Customs Head Office, Division: Trade Facilitation, Fiscus Building, John Meinert Street or in the alternative, at the customs point of entry office.

Once approved, the exemptions must be forwarded to the AsycudaWorld Functional Team for capture on the Customs system prior to importation to ensure exemption from import VAT.

Which documentation should support the application for exemption from VAT on importation of animal feed products?

Commercial and communal farmers should provide proof of registration at the Meat Board of Namibia as a farmer or any other legally recognised registration.

An application letter should be submitted, supported by (a) the invoice from the foreign supplier of the animal feed and (b) copy of ID or passport of the applicant and (c) import permits, where applicable.

Other information

Customs indicated that the granting of the exemption takes about 3-5 working days. It is therefore suggested that the application be submitted at least 7 days before the consignment of animal feed products will arrive at the Namibian border.

Note that the exemption will not be granted retrospectively. Should a truck with the animal feed products arrive at the border post without the exemption granted and recorded on the Customs system and import VAT is paid in order to proceed with urgent delivery to the Namibian farmer, a refund of import VAT will not be made if an exemption is applied for after the delivery.

It does not matter where the animal feed products are imported. It may be from another Southern African Customs Union SACU country (e.g. Botswana or South Africa), from another country in the Southern African Development Community (SADC) or even from a non-SACU or SADC country.

The exemption only applies to import VAT. Customs duties (where applicable) remain payable to Customs at the point of entry.

Chantell Husselmann is a tax leader at PwC Namibia. Tax Time is published in bi-monthly in Market Watch on a Monday.