Section 11(1)(a) of the VAT Act (the rate of zero per cent), applies where the supplier has supplied the goods (being movable goods) in terms of a sale, or an instalment credit agreement, and the supplier has exported the goods in the circumstances contemplated in paragraph (a), (b) or (c) of the definition of “exported” in section 1(1). The definition of exported (referred to above) requires the goods be consigned or delivered by the vendor to the recipient, at an address in an export country, as evidenced by documentary proof acceptable to the Commissioner. Documentary requirements are as follows:
- A contract between the vendor and the client of the order placed by the client.
- Proof of payment made by the recipient of the goods.
- A delivery note or any other documentary proof confirming receipt of goods by the client.
- A copy of the tax invoice issued by the South African vendor indicating that output VAT of 0% was levied on the supply.
- A DA74 form (application for release of goods) containing a SARS customs date stamp. This will only be required if customs previously rejected the exportation of the goods.
- Depending on the method used to submit the documentation to SARS, the following documents will be required:
> If the documentation is submitted electronically (for example via eFiling) the vendor has a choice to supply one of the following documents: export or removal documentation, custom release notification or a computer-generated release notification.
> If the documentation is submitted at a customs office on a form (manually) or on a computer disk, a copy of the export or removal documentation is required and it must contain an original SARS customs date stamp. A specific computer program was designed for parties that submit documentation via a computer disk.
Also note that there is a time limit on this, of 3 months. Failure to meet this makes the exporter liable for Standard Rated VAT at 14%.
According to Interpretation Note 30 “consigned or delivered” means:
(a) the delivery of movable goods by a cartage contractor contracted by the vendor to deliver the movable goods on the vendor’s behalf to the recipient at an address in an export country, where the cartage contractor –
- is engaged by and contractually liable to the vendor to effect delivery of the movable goods; and
- invoices the vendor and the vendor is liable for the full cost relating to such delivery; or
(b) physically delivered by the vendor to the recipient at an address in the export country including the export of the movable goods in the vendor’s baggage or by means of the vendor’s own transport
“cartage contractor” means a person whose activities include the transportation of goods and includes couriers and freight forwarders;
If the goods are removed by the recipient – i.e. “indirect export”
In the case where the recipient (the company in the foreign country), decides to use their own courier company to collect the goods, it is an “indirect export”. We conclude that none of the instances where the vendor can elect to “levy tax at the zero rate on the supply of the goods” are applicable – refer to paragraph 8 in Section A of part two of the Regulations. This means that tax at the standard rate (14%) must be levied and the recipient will claim a refund from the refund administrator.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)