Page 321 - Juta's Indirect Tax

IN 30 (3) VaLue-added tax act: InterPretatIOn nOtes IN 30 (3)
The zero-rating shall not apply if the movable goods are supplied to more than one recipient in the Republic before being exported to the nal recipient in an export country. The exclusion does not however apply to supplies made by a vendor on a ash title basis.
9. Glossary
Refer to Annexure B.
10. Conclusion
In order for a vendor to substantiate its entitlement to apply the zero rate to the supply of movable goods to a recipient at an address in an export country, that vendor must be in possession of documentary proof as is acceptable to the Commissioner. In the event that the Commissioner is not satis ed that there is suf cient proof of export, the supply cannot be zero-rated and, is therefore, subject to VAT at the standard rate.
This Note –
• only applies to direct exports, that is, movable goods supplied by the vendor under a sale or instalment credit agreement
and consigned or delivered at an address in an export country; and
• may not prescribe all possible scenarios. A vendor experiencing dif culty in determining the applicable rate of tax may,
before applying the zero rate to the supply of movable goods, submit a written application to the Commissioner either by e-mail to VATRulings@sars.gov.za or by facsimile to 086 540 9390 requesting con rmation of the application of the zero rate in the speci c circumstances.
Annexure A – The law Section 1(1) – De nitions
Example 3 – Movable goods exported and delivered to the recipient’s customer in an export country
On the basis of Example 2, in which CDE (Pty) Ltd supplies movable goods to XYZ (Pty) Ltd and XYZ (Pty) Ltd on-supplies those movable goods to QRS (Pty) Ltd, also a South African registered company and a registered vendor and who then supplies the movable goods to ABC, the customer in the export country, CDE (Pty) Ltd and XYZ (Pty) Ltd must apply the standard rate to the supply of movable goods. QRS (Pty) Ltd may apply the zero rate to the supply of movable goods to ABC Ltd.
“Customs and Excise Act” means the Customs and Excise Act, 1964 (Act 91 of 1964);
“export country” means any country other than the Republic and includes any place which is not situated in the
Republic: Provided that the President may by notice in the Gazette determine that a speci c country or territory shall from a date and to the extent indicated in the notice, be deemed not to be an export country;
“exported”, 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;
“goods” means corporeal movable things, xed property, any real right in any such thing or xed property and electricity, but excluding—
(a) money;
(b) any right under a mortgage bond or pledge of any such thing or xed property; and
(c) any stamp, form or card which has a money value and has been sold or issued by the State for the payment of any tax or duty levied under any Act of Parliament, except when subsequent to its original sale or issue it is disposed of or imported as a collector’s piece or investment article;
“invoice” means a document notifying an obligation to make payment.
Section 11 – Zero rating
(1) Where, but for this section, a supply of goods would be charged with tax at the rate referred to in section 7(1), such supply of goods shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where—
(a) the supplier has supplied the goods (being movable goods) in terms of a sale or instalment credit agreement and—
(i) the supplier has exported the goods in the circumstances contemplated in paragraph (a), (b) or (c) of the de nition of “exported” in section 1(1);
Provided that paragraphs (a), (b), (c), (d) and (i) of this subsection shall not apply in respect of any supply of goods by a vendor if in respect of such goods input tax contemplated in paragraph (b) of the de nition of “input tax” in section 1(1) has been deducted in terms of section 16(3) by that vendor or any other person where that vendor and that other person are connected persons
(2) Where a rate of zero per cent has been applied by any vendor under a provision of this section, the vendor shall obtain and retain such documentary proof substantiating the vendor’s entitlement to apply the said rate under those provisions as is acceptable to the Commissioner.
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