Harsh Realities of Royalty Payments on Customs Duty

Amongst Tax Practitioners and Advisors a time has come for a more effective collaboration in our practices.

A client has just been a subject of a painful (and expensive) SARS customs assessment, which could have been avoided had there been an all-inclusive and collaborative approach from its advisors (former).

SARS Customs has since demanded 3 years’ worth of customs duty and VAT linked to royalty payments, i.e. demanding that the additional payments be included as part of the customs value (running into millions of Rands).

Importers often pay royalty and/or license fees to licensors for the use of intellectual property in relation to the importation of goods.?Where such royalties and/or license fees are paid and relate to the importation of goods, the customs value for such goods is affected (increased).?

For customs valuation purposes, to the extent that such royalties and fees are not included in the price actually paid or payable, such payments will have to be included and the customs value adjusted to include those payments.

As such, in Tax Practices, when providing advice to clients, it is key that we use our know-how to devise an all-inclusive strategy aimed at improving and safe-guarding clients’ interests (across all taxes). Such an approach will enable favourable rulings for clients and achieve the desired outcomes.

#customs #customsvaluation #taxcompliance #royalties #sars #southafrica

For a more in-depth discussion of how we may address specific issues affecting your business from a customs perspective please contact:

[email protected]

+27 60?944 3149

+27 (12) 321 0149