Page 315 - Juta's Indirect Tax

IN 30 (3) VaLue-added tax act: InterPretatIOn nOtes IN 30 (3)
(i) on or after the effective date of Issue 3; or
(ii) in respect of progressive supplies as contemplated in section 9(3)(b) where –
• any payment for the supply becomes due or is received before as well as after the effective date of Issue 3; or • any invoice issued in relation to that payment occurs before as well as after the effective date of Issue 3; and • the goods are delivered only after the effective date of Issue 3,
the provisions of Issue 3 apply.
The following must be noted: All rulings or decisions issued taking into account the provisions of Interpretation Note No. 30 (Issue 2) dated 15 March 2006 remain in force until such rulings expire or are speci cally withdrawn.
2. Background
The South African VAT system is destination based, which means that only the consumption of goods and services in the Republic is taxed. VAT is therefore levied at the standard rate on the supply of goods or services in the Republic as well as on the importation of goods into the Republic unless an exemption or exception applies. Subject to certain requirements, VAT may be levied by a vendor at the zero rate if the vendor is responsible for consigning or delivering those goods to an address in an export country.
Paragraph (a) of ‘exported’ as referred to in section 11(1)(a) is de ned in section 1(1) of the VAT Act as follows:
‘[E]xported’, in relation to any movable goods supplied by any vendor under a sale or an instalment credit agreement, means—
(a) 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.’
In order for a vendor to supply movable goods (excluding second-hand movable goods on which notional input tax was deducted on the acquisition of such goods) under a sale or instalment credit agreement and levy VAT at the zero rate, the vendor must –
• consign or deliver the movable goods to the recipient at an address in an export country; and
• obtain and retain the required documentary proof as is acceptable to the Commissioner.
This export is classi ed as a ‘direct export’ as the vendor is in control of the export and ensures that the movable goods are exported from the Republic. The provisions of the Regulation* will apply to movable goods that are not exported by the vendor by means of a direct export, unless this Note otherwise indicates.
This Note is only applicable to the export of movable goods as contemplated in section 11(1)(a)(i) read with paragraph (a) of the de nition of ‘exported’ in section 1(1) of the VAT Act
3. The law
The relevant sections of the VAT Act are quoted in Annexure A.
4. Application of the law
A vendor supplying movable goods and consigning or delivering those goods to a recipient at an address in an export country may levy VAT at the zero rate on such supplies. The zero rate would also include consignment or delivery of the movable goods by the vendor to the recipient’s duly appointed agent or customer at an address in an export country. In order for the vendor to apply the zero rate to the supply of movable goods, the vendor must –
• export the movable goods via a designated commercial port within the prescribed time period; and
• obtain and retain documentary proof as is acceptable to the Commissioner as contemplated in section 11(1)(a)(i) read
with paragraph (a) of the de nition of ‘exported’ and section 11(3) within the required time period.
In the event that the vendor and the recipient are connected persons, sections 9(2)(a) and 10(4) setting out the rules with regard to the time and value of the supply for connected persons are mutatis mutandis applicable to the supply of movable goods being exported. The export of movable goods as well as the declaration of such goods at ports other than those ports listed in the de nition of ‘designated commercial port’ may be allowed in exceptional circumstances on application to and after approval by the Commissioner. Refer to the Customs & Border Management – External Use of Non-Designated Commercial Ports Policy Number SC-CF-13 for more detail with regard to the aforementioned.
5. Export time periods
5.1 General rule
Subject to the exceptions listed in 5.2, the movable goods must be exported from the Republic within 90 days from the earlier of the time an invoice is issued by the vendor or the time any payment of consideration is received by the vendor.
5.2 Exceptions
(a) The supply of movable goods for which an advance payment is required, must be exported within 30 days from the date(s) of export agreed upon in the contract entered into between the vendor and the recipient.
(b) The supply of precious metals which are to be exported from the Republic via air must be exported within a period of 30 days from the date of the export release as per the ‘Release Instruction’ received from the recipient acquiring the precious metal.
(c) Notwithstanding 5.2(a) –
* Published under paragraph (d) of the de nition of ‘exported’ in section 1(1) and includes any future amendments
or updates.
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