WeeklySA_AdminBARGAIN OR HEADACHE: Many South Africans don’t know that used vehicles may only be imported under specific exemptions and only after a successful application to the authorities
By Ali Mphaki
They are sourced from countries that import second-hand vehicles like SA’s landlocked neighbours Botswana, Lesotho and Eswatini (Swaziland), revealed Gary Scott, CEO of KIA South Africa.
By circumventing official channels, these illegal used car imports evade taxes and duties, leading to revenue loss for the government and unfair competition for local dealerships and manufacturers, says the National Association of Automobile Manufacturers of South Africa, naaamsa.
Price is the illegal import’s lure as these illegally imported used cars generally come with a lower price than legally sold vehicles.
South Africa outlaws the importation of used vehicles. For years, Africa has been the dumping ground for inferior used cars from abroad But each year around 30,000 illegal used car imports (often referred to as ‘grey imports’) leak into South Africa, coming from SA’s landlocked neighbours.
The Automotive Business Council says that illegally imported used cars cost the fiscus between R5 billion and R8 billion a year in direct taxes.
These were among the key takeaways at the AutoTrader Dealer Convention in April, where key industry players discussed illegal used car imports and their impact on South Africa.
There’s more to the illegal import saga. The influx of illegal used car imports negatively impacts local car market sales, undermines local manufacturing, technological innovation and job creation, and aids criminal activity. Consumers, solving for affordability, probably care little about revenue loss. But the risk of personal loss is just as real.
There’s a price to pay for buying cheap. “Illegal used car imports are often very old and may not meet local regulations and safety standards, potentially endangering motorists and other road users”, said naamsa CEO, Mikel Mabasa.
Buyers also face challenges in obtaining warranties, spare parts and after-sales service.
“And they run the risk of the car being impounded and destroyed”, added Scott. Unless displaying a foreign plate, identifying illegal used car imports is not straightforward.
“We don’t sit on metadata that is structured enough to identify these cars,” explained George Mienie, CEO of AutoTrader. “So AutoTrader took it upon itself to build a VIN database with the intention of identifying these illegal imports. At a minimum, this ensures transparency for the consumer.”
Stemming the flow of illegal used car imports is no easy task. “Multiple stakeholders need to come to the party to resolve the issue,” stated Mabasa citing SARS, Department of Transport, SAPS and Metro Police among them.
Some progress has been made. “We’ve already spoken to Transnet and they’ve agreed that those vehicles [being imported to neighbouring countries] will now move from the Durban port to the Maputo port. So we’re actually moving them away from South Africa into Mozambique.”
Scott goes on to add “Many South Africans don’t know that used vehicles may only be imported under specific exemptions and only after a successful application to the authorities. Foreign-plated cars can only be driven by their foreign owners themselves, during the visit period”.
Buyers are warned to beware when something seems too good to be true, it usually is. Your bargain buy could turn into an expensive mistake.
WHAT THE LAW SAYS : A CASE STUDY;
• Owners of imported vehicles registered in any Southern African Customs Union (SACU), can drive freely without an import permit on South African roads. The Southern African Customs Union (SACU) consists of Botswana, Lesotho, Namibia, South Africa and eSwatini.
• The Supreme Court of Appeal (SCA) dismissed an appeal by the South African Revenue Service (SARS) after an earlier judgement in the Free State High Court in favour of Joaquim Alves, a Ficksburg resident whose vehicle with Lesotho number plates was impounded by customs officials in 2019.
• The SCA ruled that the application for special leave to appeal by SARS is dismissed with costs on the grounds that the requirements for special leave to appeal are not satisfied.
• Alves’s vehicle was stopped in Ficksburg by customs officials in 2019 who demanded an import permit. Alves told them that the vehicle was legally registered in Lesotho and does not need a permit, but the officials impounded the vehicle. Alves then went to the pound in Fickburg to claim his vehicle. However, a few hours later police officers arrived at his home and charged him with theft of his own vehicle and arrested him, once again confiscating his vehicle.
• Alves spent the weekend in police cells. A local Magistrate ordered on the Monday that Alves and his vehicle be released. The charge of theft was withdrawn but the vehicle was not released.
• Alves took SARS to court and won his case in the Free State High Court in 2019. SARS still hung on to the vehicle while appealing the case.
• In its appeal, SARS argued that the vehicle has been seized in terms of Section 88 of the Customs and Excise Act and that the vehicle was an import and that a permit was required. According to Section 88 of the Customs and Excise Act, any officer, Magistrate or member of the police has the right to “detain any ship, vehicle, plant, material or goods at any place for the purpose of establishing whether that ship, vehicle, plant, material or goods are liable to forfeiture under this act”.
• Alves’s attorney argued that this clause is badly worded and open-ended, meaning that any South African driving their locally-purchased vehicle could be subject to the same treatment as Alves. “Any customs or police official has the right to seize your vehicle to see if it violates the Customs and Excise Act. This in our opinion violates the constitutional protections against arbitrary deprivation of property. This must be challenged.”
• He said the case will have a positive effect as the law has now been clarified. Lesotho falls under the SACU, with a single tariff and no customs duties between the member states. “If you own a vehicle, no matter where it was manufactured, and it has been imported into the SACU area, you are free to drive it anywhere in the common customs area.”
• Radebe said the litigation by SARS, paid for by taxpayers is an outrage. Alves’s vehicle, a Nissan Serena, is only worth about R40 000, but the legal costs amounts to over R1 million which SARS now has to pay with taxpayers’ money.
• Alves has now also lodged charges of fraud and contempt of court against the officials involved for not releasing his vehicle when ordered to do so by the Magistrate.- sourced from Webber Wentzel
