Refund System o Paragraph 1: Both Governments will establish a refund system to administer the refund and assessment of tax as provided for by the Agreement. o RSA VAT is destination based, i.e. imports and domestic consumption is taxed while exports are free of tax;
o a direct export is free of tax whereas an indirect export is taxed with a refund mechanism to the person who paid the tax; o harmonised tax laws, i.e. same tax rate, currency valuation, tax design and administration, facilitate implementation of a tax refund system between governments.
Refund System. 1. Under the powers vested in the Governments of the Contracting States by the relevant provisions of the tax legislation, a refund system to administer the refund and assessment of tax as provided for in this Agreement shall be established.
2. Each Contracting State may appoint a Claims and Refund Manager and shall inform the other Contracting State of any such appointment.
3. Refunds in respect of tax shall be administered by each Contracting State or by the Claims and Refund Manager subject to tax legislation and in accordance with the provisions of this Agreement.
4. The tax authorities of the Contracting States shall, subject to tax legislation and in accordance with the provisions of the Agreement, develop a Memorandum of Understanding setting out operational procedures regarding -
(a) any matter relating to the refund of tax in respect of exports from an export State to an import State;
(b) the determining and monitoring of the amounts refundable in terms of the Agreement;
(c) the intervals at which refunds are to be made in terms of the Agreement;
(d) the responsibilities of a Claims and Refund Manager; and
(e) any matter that will facilitate or improve the operation of the refund system provided for in the Agreement.
5. Where tax has been charged and collected by a vendor in the export State on a sale or supply of goods which have been exported, any refund due in respect of such amount of tax shall, after deduction of any commission due to the Claims and Refund Manager, be transferred to the tax authority in the import State or refunded to the importer. The terms and conditions for the transfer or refund must be determined by the tax authorities of the Contracting States in the Memorandum of Understanding.
6. Where an importer has paid a lesser amount of tax in the export State in respect of a sale or a supply of goods that have been exported than the tax liability in the import State, the deficit shall be recovered from the importer by the tax authority in the import State.
Refund System. The processor shall invoice the RA at the commercial/gross price of the end product. Refunds that reflect the value of the DF contained in the end products shall be made to the RA upon proof of purchase. Refund payments shall be initiated or paid as follows:
(1) The RA shall submit a refund application to the Processor within 30 days from the end of the month of the date of delivery. RA’s may submit refund applications to the processor on a quarterly basis if the total refund due is $25 or less during the quarter.
(2) Within 30 days of the receipt of the refund application, the Processor shall compute the amount and issue payment of refund directly to the RA. Processors may issue payment of refunds on a quarterly basis if the total payment due to that RA is $25 or less during the quarter. Sales cannot be reported and the inventory cannot be reduced until refunds are actually issued.
(3) Copies of the refund application and payment to the RA’s shall be forwarded to the appropriate DA by the Processor with the monthly performance report.
Refund System. The Processor shall sell to the distributor at the commercial/gross price. The distributor will invoice the RA this price plus the distributor's markup. Refunds shall be made to the RA by the Processor that reflect the value of the DF contained in the end products upon receipt of refund application. Refund payment shall be initiated and paid the same as listed above in paragraph 1) b.1 through 3.
Refund System o Paragraph 3: Refunds in respect of tax shall be administered by each Contracting State or by the Claims and Refunds Manager, subject to tax legislation and in accordance with the provisions of this Agreement.
Refund System. (d) the responsibilities of a Claims and Refunds Manager; and
(e) any matter that will facilitate or improve the operation of the refund system provided for in the Agreement. o Paragraph 5: Where tax has been charged and collected by a vendor in the export State on a sale or supply of goods which have been exported, any refund due in respect of such amount of tax shall be transferred to the tax authority in the import State or refunded to the importer. The terms and conditions for the transfer or refund must be determined by the authorities of the Contracting States in the MOU.
Refund System o Benefits - o harmonises a common customs procedure; o removes incentive to under-declare imports and round trip goods; o reduces the administrative burden on both tax authorities - o no requirement for the VAT Refund Administrator (VRA); o single less frequent payments to tax authority. oParagraph 2: Each Contracting State may appoint a Claims and Refunds Manager and shall inform the other Contracting State of any such appointments.
Refund System. (d) the responsibilities of a Claims and Refunds Manager; and
(e) any matter that will facilitate or improve the operation of the refund system provided for in the Agreement.
