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PN 10/1991 VaLue-added tax act: PractIce nOtes PN 10/1991
The ancillary transport service must furthermore be provided by the supplier of the international transport service in the contractual sense. The supplier of the ancillary transport service in the contractual sense is not necessarily the person who physically performs the service although this may be the case.
Example 1:
A clearing and forwarding agent contracts with an importer to have goods transported from the factory door of the importer’s supplier in Liverpool to the importer’s warehouse in Germiston. The clearing and forwarding agent is acting as a principal and subcontracts with other parties in order to provide his total service. The forwarding and clearing agent subcontracts with a shipping line to transport the goods from Liverpool to Durban. He subcontracts with a stevedore to have the goods unloaded from the ship. He prepares the customs documentation and clears the goods through Customs. He subcontracts with Spoornet to transport the goods from Durban to Johannesburg. He then transports the goods from Johannesburg to the importer’s premises in Germiston himself.
The shipping line, if registered as a vendor, will charge VAT at zero per cent to the clearing and forwarding agent on its services of transporting the goods from the factory door of the importer’s supplier in Liverpool to Durban.
The stevedore will charge VAT at the standard rate of 10 per cent to the clearing and forwarding agent on his services of unloading the goods from the ship. Whilst his services are supplied as part of the international transport of the goods, the stevedore is not responsible for the transportation of the goods from Liverpool to Durban. He may thus not zero rate his services.
Spoornet will charge VAT at the standard rate of 10 per cent to the clearing and forwarding agent on its services of transporting the goods from Durban to Johannesburg. Whilst Spoornet’s services are supplied as part of the international transport of the goods, Spoornet is not the supplier of the international transport service and may thus not zero rate its services.
The forwarding and clearing agent will charge VAT at the rate of zero per cent on its entire service of moving the goods from the factory door in Liverpool to the importer’s premises in Germiston. The fact that the various charges for the different facets of the entire transport service are separately itemised on his invoice to the importer does not affect the position at all. The VAT charged by the stevedore and Spoornet will, of course, qualify as input tax in the hands of the forwarding and clearing agent as he is acting as a principal and the services rendered by the stevedore and Spoornet are acquired in order to perform his service of transporting the goods from Liverpool to Germiston.
Example 2:
An importer buys goods on a CIF basis. While the goods are in transit to the Republic the importer contracts with
clearing and forwarding agents to clear the goods through Customs and to transport them to the importer’s warehouse. The clearing and forwarding agent subcontracts with a trucking rm to transport the goods from Durban to the importer’s warehouse.
The trucking rm will charge VAT at the standard rate of 10 per cent to the clearing and forwarding agent on its services of transporting the goods from Durban to the importer’s warehouse.
The clearing and forwarding agent will charge VAT at the standard rate of 10 per cent on its services of clearing the goods and transporting the goods to the importer’s warehouse. The services of the clearing and forwarding agent do not form part of an international transport service supplied by him. The VAT charged by the trucking rm will qualify as input tax in the hands of the forwarding and clearing agent as he is acting as a principal and the services rendered by the trucking rm are acquired in order to perform his service of clearing the goods and transporting them to the importer’s warehouse.
4.2 Ancillary transport services supplied, directly in connection with the importation or exportation of goods, to non-residents, otherwise than through an agent or other person
In terms of section 11 (2) (e), ancillary transport services are zero-rated provided they are supplied—
(a) directly in connection with—
(i) the exportation of goods from the Republic or a speci ed country; or (ii) the importation of goods into the Republic or a speci ed country; or
(iii) the movement of goods through the Republic or the speci ed countries from one export country to another export country; and
(b) directly to a person who is—
(i) not a resident of the Republic; and
(ii) not a resident nor carrying on business in a speci ed country; and (iii) not a vendor,
otherwise than through an agent or other person.
To qualify for the zero-rating the supply of the ancillary transport service must meet at least one of the conditions enumerated in (a) and all of the conditions in (b). It is important to note that the ancillary transport service must be provided to the non-resident otherwise than through an agent or other person. The supplier of the ancillary transport service must therefore contract with the non-resident directly and not through an agent of the non-resident or other intercessionary in the Republic or a speci ed country.
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ARRANGING OF INTERNATIONAL TRANSPORT SERVICES
The services of arranging the transport of goods is zero-rated if the transport of goods is—
(i) from a place outside the Republic and the speci ed countries to another place outside the Republic and the
speci ed countries; or
(ii) from a place in the Republic or a speci ed country to a place in an export country; or
(iii) from a place in an export country to a place in the Republic or a speci ed country; or
(iv) from a place in the Republic or a speci ed country to another place in the Republic or a speci ed country where the transport within the Republic or the speci ed countries is supplied as part of the services of transporting
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