The single most expensive mistake in importing is budgeting off the supplier's price. A quote from a factory is for the goods. What you pay is the goods, plus duty, plus VAT calculated on a figure that is deliberately higher than what you paid, plus freight, clearing and port charges. Businesses discover the gap after the money is already committed.
Why the quote is never the cost
An overseas supplier quotes for the goods leaving their side. Everything that happens after that — the shipping, the duty, the tax, the paperwork, the port — is yours, and most of it is calculated on figures the supplier never sees.
The important thing to understand is that South African import tax is not applied to the invoice you paid. It is applied to a customs value determined under customs rules, and then that value is increased before VAT is worked out. If you have budgeted 15% of the invoice for VAT, you have already under-budgeted.
How SARS calculates import VAT
SARS states the calculation as: the customs value, plus any duty levied on the goods, plus 10 per cent of the customs value. VAT is then charged on that total at 15%.
That total has a name — the Added Tax Value. Three things go into it, and only one of them is the price you negotiated.
The 10% uplift
The 10% addition is the part almost nobody models. It is not a duty and it is not a fee anybody invoices you for — it is simply added to the customs value before VAT is calculated. On a R200,000 customs value it adds R20,000 to the figure that gets taxed, before any duty is even considered.
When the uplift does not apply
Where the goods originate in and are imported from Botswana, Lesotho, Namibia or Eswatini, SARS calculates the Added Tax Value as the customs value plus any duty levied, without the 10% addition. If you are sourcing regionally rather than overseas, this is a real difference in the tax base.
Customs duty and the tariff code
Duty is set by the tariff code your goods are classified under, not by what the invoice calls them. Two products that look similar can sit under different codes and attract very different rates, and the rate feeds into the VAT calculation above as well — so a classification error moves both numbers.
The classification is made in your name. A clearing agent submits the entry, but the importer is the one on the declaration. Confirm the code before you commit to an order — it is the difference between a margin and a loss, and it is far cheaper to check than to correct.
The costs nobody quotes you
- Freight and insurance — and whether they are inside or outside the price depends entirely on the incoterm you agreed.
- Port and terminal charges — levied on the cargo, not by your supplier.
- Clearing agent fees — per entry, plus the disbursements they pay on your behalf.
- Storage while the goods sit — free time at a terminal is measured in days. After that the charges accrue daily, including every day spent resolving a query. See why goods get held at customs.
- The exchange rate on the day you pay — not the day you agreed the price.
Working it out before you order
Do this in the order SARS does: establish the customs value, add any duty for your tariff code, add 10% of the customs value, then apply 15% VAT to that total. Then add freight, clearing and port charges on top. The number you end up with is the one your selling price has to carry.
The reason to do this before paying a deposit is simple: every one of these costs is fixed by the time the goods arrive. The only point at which you can still walk away from a bad landed cost is before you commit.
Frequently asked questions
- Is import VAT 15% of what I paid the supplier?
- No. SARS calculates VAT on the customs value, plus any duty levied on the goods, plus 10% of the customs value. That total is the Added Tax Value, and VAT is charged on it at 15%.
- Does the 10% uplift always apply?
- No. Where goods originate in and are imported from Botswana, Lesotho, Namibia or Eswatini, the calculation is the customs value plus any duty levied, without the 10% addition.
- Can I claim the import VAT back?
- A VAT-registered business can generally claim import VAT as input tax, subject to holding the correct customs documentation. It still has to be funded at the time of clearing, which is a cash-flow cost even when it is recoverable.
- What decides how much duty I pay?
- The tariff code your goods are classified under. It is set by what the goods actually are, not by the description on the supplier's invoice, and the declaration is made in your name.
Next steps
Cost is only one of the three things that go wrong with an import. The other two are permits and paperwork — read whether you need to register as an importer and why goods get held at customs.