Grey import vehicles cost fiscus plenty in direct taxes

GREY import vehicles are costing the fiscus between R5 billion and R8 billion a year in direct taxes, excluding income taxes, according to automotive business council NAAMSA.

“This is a massive number,” said Gary Scott, the NAAMSA Vice President for retailing for original equipment manufacturers (OEMs), on Tuesday at a SA Auto Week event.

“It excludes grey imports that are parading as South African cars that have been naturalised on the Natis system through nefarious means. “That is a problem as well,” he said.

Scott said new vehicle sales to the Southern Africa Customs Union (SACU) had declined by 23 per cent in the last five years, while new vehicle sales in South Africa declined by 18 per cent in the same period.

There are a number of reasons for this, but the biggest is grey imports, he said. “It’s actually jaw-dropping numbers. It involves organised syndicates.” Scott said South Africa has strict control measures that should ensure only a limited number of legal used vehicle import permits are issued.

The exceptions to these strict rules are for immigrants, the cars of returning South African residents, specifically adapted vehicles for persons with physical disabilities, vehicles that have been inherited by South African citizens, vintage and collector passenger vehicles and racing cars.

Problematic

He said customs does not issue more than 20 000 used vehicle import permits a year.

As many as 500 000 of the about 11 million vehicles on South Africa’s roads are possibly ‘problematic cars’, Scott says. Even if it is assumed that all of the foreign number plates on these vehicles are legitimate and registered on a database of a neighbouring country, 440 000 of these vehicles have been in South Africa for longer than 12 months, which is not permitted, he said.