Page 318 - Juta's Indirect Tax

IN 30 (3) VALUE-ADDED TAX ACT: INTERPRETATION NOTES IN 30 (3)
(a) In order to apply the zero rate to the supply of movable goods that are to be exported, the vendor must obtain the required documentary proof within a period of 90 days calculated from the date the movable goods are required to be exported from the Republic as contemplated in 5.1 and 5.2.
(b) In the event that the required documentation is not obtained by the vendor within the prescribed period set out in 7(a), the requirements of section 11(3) are not met and VAT therefore could not have been levied at the zero rate under section 11(1). As a result, the vendor is required to account for output tax on the supply. The output tax is calculated by applying the tax fraction to the consideration for the supply. The vendor must include the amount of output tax in Block 12 of the VAT return for the tax period in which the said period of 90 days ends.
(c) Should the vendor receive the documentation in respect of which output tax was calculated as stipulated in 7(b) within ve years from the end of the tax period during which the original tax invoice for that supply was or should have been issued, the output tax adjustment as contemplated in 7(b) may be deducted as an adjustment in Block 18 of the VAT return for the tax period in which this documentation is received: Provided that the vendor must be able to provide proof to the Commissioner that the vendor –
(i) initially accounted for VAT at the zero rate;
(ii) has furnished a return for the tax period for which the output tax calculated in 7(b), that is, the output tax
adjustment, was payable; and
(iii) has properly accounted for the output tax on that supply as contemplated in 7(b).
(d) The vendor having obtained all the other required documentary proof is not required to account for output tax as a result of not obtaining the required proof of payment for the total consideration within the period set out in 7(a) if – (i) the vendor has entered into a written contract with the recipient for the payment of the consideration for the
supply to be made after or over a period exceeding the 90 days but not exceeding six months;
(ii) the vendor has entered into a written contract with the recipient for the payment of the consideration for the supply to be made after or over a period exceeding six months but not exceeding 12 months and has the relevant
approval from a dealer in foreign exchange authorised by the South African Reserve Bank;
(iii) the vendor has entered into a written contract with the recipient for the payment of the consideration for the supply to be made after or over a period exceeding 12 months and has the relevant approval from the South
African Reserve Bank;
(iv) a written contract provides for a retention amount to be withheld for a period exceeding ve years due to the
nature of the goods supplied and proof of payment of the retention amount has not been obtained;
(v) the recipient is unable to effect the payment due to the restrictions imposed on foreign exchange by the country
in which the recipient conducts its enterprise;
(vi) the vendor has the relevant approval from the South African Reserve Bank or a dealer in foreign exchange
authorized by the South African Reserve Bank not to repatriate any foreign currency for that supply;
(vii) in the case of exports via air or sea, the time of export has occurred but the movable goods have not yet been
removed from the Republic. This exception is limited to a period of six months from the time of export; or
(viii) the vendor has written off the said consideration as irrecoverable.
(e) The vendor must, if applicable, obtain and retain a copy of the relevant approval referred to in 7(d). The aforementioned approval does not have to be obtained if the movable goods are exported to a country falling within the common monetary area as de ned in the South African Reserve Bank’s Exchange Control Manual.*
(f) In the event that the required proof of payment for the total consideration is not obtained by the vendor within the prescribed period set out in 7(d), excluding (vi) and (viii), the vendor would not comply with the requirements of section 11(3) and is therefore not allowed to levy VAT at the zero rate under section 11(1).
(g) The vendor is required to account for output tax on the supply to the extent of payment not received if the provisions of 7(d), excluding (vi) and (viii), are applicable and the vendor has not received proof of payment for the total consideration within the period allowed. The output tax is calculated by applying the tax fraction to the consideration for the supply. The vendor must include the amount of output tax in Block 12 of the VAT return for the tax period in which the said period ends.
(h) Should the vendor receive the documentation in respect of which output tax was calculated as stipulated in 7(g) within the extended period approved by a dealer in foreign exchange authorised by the South African Reserve Bank or approved by the South African Reserve Bank, limited to a period of ve years from the end of the tax period during which the original tax invoice for that supply was or should have been issued, the amount calculated in 7(g) may be deducted as an adjustment in Block 18 of the VAT return for the tax period in which this documentation is received. The vendor must, however, be able to provide proof to the Commissioner that the vendor –
(i) initially accounted for VAT at the zero rate;
(ii) has furnished a return for the tax period for which the output tax calculated in 7(g), that is, the output tax
adjustment, was payable; and
(iii) has properly accounted for the output tax on that supply as contemplated in 7(g).
(i) The rate of tax applicable for purposes of 7 is the rate of tax in force at the date of issue of the tax invoice.
8. Speci c types of supplies of movable goods
Certain speci c scenarios are explained in more detail below. The documentary proof requirements as set out in 6 apply in these instances, except if the context speci cally otherwise indicates.
8.1 Second-hand movable goods
Unlike other direct exports, the supply of second-hand movable goods for export may, under the proviso to section 11(1), not be subject to VAT at the zero rate if notional input tax was deducted on the acquisition of such goods.
* This includes any future updates and or amendments.
310 Juta’s IndIrect tax 2016