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Introduction

This guide outlines the documents and procedure required for clearance of motor vehicle for tax purposes. It covers the documents and procedure for clearance of all motor vehicles purchased locally as well as the imported vehicles from within SACU countries and those bought from countries outside SACU countries. This guide is therefore intended to give guidance to first time buyers of motor vehicles so that they know exactly what is expected of them in order to comply with the requirements of the Value Added Tax Act 2001 and Custom and Excise ACT 1982 (both as amended).

In order to clear a new motor vehicle for tax purposes, the documents listed below will be required:

  • VAT invoice from the motor dealer or supplier of the new vehicle
  • Copy of Identity document (passport) of the purchaser and/or a representative of the purchaser
  • A letter of authorization from the Purchaser authorizing representative to act on his/her behalf.

 

 
The following documents are required for tax purposes for clearance of a second hand motor vehicle already registered and purchased in Lesotho:
  • Motor Vehicle Registration Certificate or Blue Book (alternatively called Blue Card) in the case of a motor vehicle which has already been registered in Lesotho
  • Present motor vehicle for physical inspection
  • Proof of payment of valued added tax (VAT) e.g. Tax Invoice, VAT 11 form or Sales Tax Certificate
  • Agreement for a change of ownership.
  • Sale Agreement between the seller and the purchaser (Deed of sale)
  • Copy of Identity document of a buyer and seller e.g. copy of passport, driver’s license, national election identity card, national identity card
  • A letter of authorization from the purchaser authorizing the representative to act on his behalf
  • A copy of identity document of an authorized representative e.g. copy of passport, driver’s license, national election identity card, national identity card
 
Due to an arrangement made between the Government of the Kingdom of Lesotho and Republic of South Africa a person importing a new vehicle purchased from the Republic of South Africa has to produce the following documents:

a) A valid Tax Invoice. A valid Tax invoice must have the following characteristics:
  • Must be an original Tax invoice,
  • It should have a VAT Registration number of the Supplier in RSA ( which VAT Registration number should have ten digits beginning with the number 4),
  • It should have an invoice date,
  • It should have an invoice number,
  • Reflect the VAT amount paid or an indication that VAT has been paid at the standard rate (14%), and
  • Must not be 90 days old from the date of issuance.
b) A Manufacturer’s Certificate, and
c) SARPCCO Clearance (optional).
 
A person importing a second hand vehicle purchased from the Republic of South Africa has to be in possession of the following documents:

i. A Valid Tax Invoice. An invoice is considered to be valid only when:
  • It is an original tax invoice,
  • It should have a VAT Registration number of the Supplier ( which VAT Registration number should have ten digits beginning with the number 4),
  • It should have an invoice date ( the date on the invoice must not be older than 90 days from date of purchase to date of presentation at the border) ,
  • It should have an invoice number,
  • Reflect the VAT amount paid or indication that VAT has been paid at the standard rate of 14%
ii. If no valid Tax Invoice is present, Proof of sale document,
iii. SARPCCO Clearance Certificate,
iv. Change of Ownership Form,
v. Deregistration Certificate.
 
A person importing a new or second hand vehicle purchased from other SACU countries other than in South Africa has to produce the following documents at boarder entrance:
 
  • A valid Invoice,
  • Police Clearance Certificate (SARPCCO Clearance Certificate).
 
A person importing a new or second hand motor vehicle purchased from outside SACU countries, most of which are usually bought from bonded Warehouses in Durban in the Republic of South Africa, needs to be in possession of the following documents:
 
  • An Import Permit ( which should have been obtained before the vehicle is imported),
  • An Invoice,
  • Proof of Payment may be required,
  • A Bill of lading / Air Waybill,
  • A Warehousing entry,
  • An RIB Form,
  • A Customs Release Notification Form (prepared by the South African Revenue Services (SARS),
  • Receipt of Carrier (i.e. of person who transported the vehicle from the bonded warehouse to Lesotho),
  • Customs Worksheet.
 
A person importing a new or second hand vehicle purchased directly from outside SACU countries, usually these are vehicles not purchased from bonded Warehouses in Durban in the Republic of South Africa, needs to be in possession of:
 
  • Import Permit,
  • Invoice,
  • Proof of Payment must be required,
  • A Bill of lading / Air Waybill,
  • A Warehousing entry,
  • An RIB Form,
  • A Customs Release Notification Form,
  • Receipt of Carrier,
  • Customs Worksheet.
 
New motor - vehicle purchased from South Africa:
 
  • Present 4 copies out of the 6 copies of a SAD Form which should have been filled in on the South African Border to Customs Officers of Lesotho. Out of the 4 copies presented, one should have been stamped on the South African Border,
  • Present the Manufacture’s Certificate to the Customs Officers,
  • Present a valid invoice/tax invoice and four (4) copies thereof. The original invoice must have been stamped on the South African Border,
  • If a registered Vendor, fill in VAT Refund envelope if invoice is a valid tax invoice,
  • If an individual, fill in VAT Refund form if invoice is a valid tax invoice,
  • Pay VAT if there is no valid Tax Invoice.
Second hand motor - vehicle purchased from South Africa:
 
  • Present 4 copies out of the 6 copies of a SAD Form which should have been filled in on the South African Border, to Customs Officers of Lesotho. Out of the 4 copies presented, one should have been stamped on the South African Border,
  • Present the SARPCCO Clearance Certificate to the customs officers,
  • Present the deregistration Certificate to the Customs Officers,
  • Present the Change of ownership form to the Customs Officers,
  • Present the Change of ownership form to the Customs Officers,
  • If individual fill, in a VAT Refund Form if in possession of a valid Tax Invoice,
  • If a registered vendor, fill in a VAT Refund envelope if in possession of a valid Tax Invoice,
  • Pay VAT if there is no Valid Tax Invoice.
 
  • Present 4 copies out of the 6 copies of a SAD Form which should have been filled in on the South African Border, to Customs Officers of Lesotho. Out of the 4 copies presented, one should have been stamped on the South African Border. (Transit document stamped)
  • Deed of sale/sale agreement if second hand motor vehicle,
  • Present valid invoice,
  • Pay 14% VAT on the gross value of invoice/as per value determined by customs valuation method,
  • SAD Form and the invoice should have been stamped on the South African Border,
  • Transit document stamped on entry and exit of the South African Border.
1. Time period allowed for Declarations to be made:
 

Every person having motor vehicle in his possession and bringing it into Lesotho has to declare it to Customs Officers upon arrival into Lesotho or at the time of importation into Lesotho. See Section 14 of Customs and Excise (Amendment) Act No.25 of 1986; section 12 (1) (a) & (b) and section 12 (3) (a) & (b) of the Customs and Excise Act No 10 of .

Over and above that where duties are payable with respect to the motor vehicle, due entry has to be made with respect to motor vehicle within seven days from the date of importation or within such time allowed by the Commissioner of Customs and Excise. See Section 39 (1) (a) of the Customs and Excise Act No.10 of 1982.

2. Taxes, duties and costs payable at the Ports of entry

a) The following taxes, duties and costs are payable on all motor vehicles imported from extra SACU:
  • Customs duties,
  • VAT. (For purposes of determining how much VAT is payable one has to add the cost of motor vehicle, insurance and freight (CIF) with customs duties and multiply the total by the rate of VAT applicable,
b) The following taxes are payable on all goods imported from SACU Countries:
  • VAT.
    Note: If a motor vehicle is purchased form South Afrika and the person bringing the motor vehicle into Lesotho has in his/her possession a valid tax invoice, then such a person does not have to pay for VAT in cash. If the importer insists to retain an original tax invoice, the importer has to pay in cash.
3. Proof of declaration

Possession of the following documents by an importer constitutes prima facie proof that the motor vehicle has been properly declared.
  • A Declaration Document ( SAD Form ) bearing a stamp impression of the Lesotho Revenue Authority, which stamp impression reflects the port of entry the goods entered Lesotho,
  • Receipts or an IVCF Pay Advice bearing a stamp impression of the Lesotho Revenue Authority, An IVCF Pay Advice is only issued to importers having an Import VAT Credit Facility with the Lesotho Revenue Authority,
  • VAT Clearance Certificate (VAT 11),
  • Customs Clearance Certificate issued only in respect to motor vehicle purchased from extra SACU.
4. Legal Consequences of non-Compliance with the Customs and Excise Laws and Value Added Tax Laws

In terms of section 88(1) of the Customs and Excise Act, any motor vehicle imported or dealt with contrary to the provisions of the Customs and Excise Act or in respect of which an offence under the Customs and Excise Act has been committed become liable to forfeiture and may be detained wheresoever and in possession of whomsoever they are found. Once detained the motor vehicle maybe seized and forfeited.
  • In terms of section 79 (1) of the Customs and Excise Act, any person who contravenes any provision of the Customs and Excise Act or who fails to comply with any provision of the Act which it is his duty to comply with, commits an offence, which on conviction attracts the imposition of severe penalties or fine of up to three times the value of the motor vehicle in respect of which such offence was committed or to imprisonment for a period not exceeding six months, or both such fine and such imprisonment.
  • Failure to declare a motor vehicle for example or making false declarations or statements to a Customs Officer in relation to a motor vehicle or failing to pay Customs duties in the event that they are payable may result to seizure of the motor vehicle and to criminal prosecution with the imposition of severe penalties referred to above.
  • Likewise, under the VAT Act No.9 of 2001, it is an offence under section 61 of the VAT Act to fail to pay VAT when due, which upon conviction a fine of not less than M2000.00 but not exceeding M6000.00 may be imposed or imprisonment for a term not less than one year but not exceeding three years may be imposed, or both such fine and imprisonment. Furthermore a person who fails to pay VAT when due is liable for Additional Tax on the unpaid VAT at the rate of 3% per month or part of the month the VAT is outstanding.
  • Again in terms of section 70 of the VAT Act, a person who makes a false or misleading statement to a tax officer commits an offence, which upon conviction severe penalties or fine is imposed. Alternatively Additional Tax at the rate of 200% may be imposed.
  • In terms of section 85 of the VAT Act, a registration of a vehicle which has not complied with the Customs and VAT Clearance processes is null and void.
  • The above list is not an exhaustive list of contraventions identified as amounting to offences in both Acts or in respect of which sanctions or legal measures may be imposed or taken.
5. Obstructing Tax Officers or Customs Officers in the execution of their duties.
 
  • It is very important to note that in terms of section 80 (1) (c) of the Customs and Excise Act, it is an offence for any person to refuse or fail to comply with the lawful requirements of an officer or refuse or fail to answer to the best of his power any question which an officer in the exercise of his functions has put to him. It is also an offence in terms of 80 (1) (e) of the Customs and Excise Act for any person to resist or hinder an officer in the exercise of his powers or the performance of his functions under the Act.
  • Likewise in terms of section 71 of the VAT Act, it is an offence for any person to obstruct an officer in the performance of his or her duties.
 
Disclaimer:

This Guide is for general information only, and has no binding legal authority. For any queries, you may contact the nearest LRA Advice Centre for further assistance and guidance. Please take note that it is your obligation to verify independently any matters dealt with in this Guide from primary sources of information and by taking specific professional advice, should it be necessary. The LRA excludes any liability for any costs, losses, claims, damages, expenses or proceedings (including special, incidental or consequential loss or damage, loss of profits and wasted management time) incurred or suffered by you arising by directly or indirectly in connection with this guide.