Page 477 - Juta's Indirect Tax

IN 81 (2) VaLue-added tax act: InterPretatIOn nOtes IN 81 (2) and other entertainment supplied for a separate charge is subject to VAT at the standard rate. The full consideration for
commercial accommodation that is supplied to the foreign hunter for less than 28 days is subject to VAT.
4.2 Hunting services
The nature of these services is such that the foreign hunter consumes the services whilst being physically present in the Republic. The supply of these services is therefore subject to VAT at the standard rate.
4.3 Trophy fee
The trophy fee is consideration for the supply of the hunted animal. This constitutes a supply of goods by the hunting out tter which may be zero-rated provided that the goods are exported under any of the following circumstances:
• Direct export
• Indirect export: election to zero-rate
• Indirect export: further work
4.3.1 Direct export
The goods are supplied to the foreign hunter in terms of a sale or an instalment credit agreement and consigned or delivered* by the hunting out tter to the foreign hunter at an address in an export country,† and the relevant documentary requirements are met.‡ It is acknowledged that the goods supplied, being a hunted animal, is a trophy when exported.
4.3.2 Indirect export: Election to zero-rate
The hunting out tter may elect to zero-rate the supply of the hunted animal to the foreign hunter where the hunting out tter ensures that the animal is delivered to a designated harbour or airport and the requirements of the export regulation§ are met.¶ The hunting out tter may also elect to apply VAT at the standard rate instead of applying the zero rate. In this instance, the foreign hunter will be entitled to claim a VAT refund from the VAT Refund Administrator, provided the requirements
of the export regulation are met.**
4.3.3 Indirect export: Further work
A hunting out tter may, under paragraph 8(2)(d) of the export regulation, elect to zero-rate the supply of the hunted animal to a foreign hunter if the hunting out tter ensures that the animal is delivered to a taxidermist who will export†† the trophy after further processing (for example, after the trophy is mounted). In order to qualify for the zero rate, the trophy has to be exported within 90 days from the date of completion of the taxidermy process or such extended period provided for in the export regulation.‡‡
The hunting out tter must also obtain and retain the documentary proof prescribed in paragraph 10(1)(g)(ii) of Part Two of the export regulation, including a substantiating statement from the taxidermist. The substantiating statement must contain the taxidermist’s invoice number and date of the invoice or the contract for the services rendered, con rmation that the animal was used in the taxidermy process and details of the export documentation pertaining to the export of that trophy.
Generally, the hunting out tter retains all other parts of the hunted animal that are not used by the taxidermist in rendering the agreed upon taxidermy services to the foreign hunter. The hunting out tter is liable for VAT at the standard rate on the subsequent sale of these parts to persons in South Africa, unless such supply is speci cally zero-rated.
4.3 Dip and pack and taxidermy services
The supply of dip and pack and taxidermy services may be zero-rated under section 11(2)(l)(ii)(aa). The zero rate can only apply if the trophy is exported to the foreign hunter after the supply of the services, provided the supplier obtains and retains the required documentary proof as contemplated in section 11(3).§§ If the foreign hunter collects and subsequently removes the trophy from the Republic, the trophy is not exported to the foreign hunter and the dip and pack and taxidermy services are therefore subject to VAT at the standard rate of 14%.
4.4 Other services consumed in the Republic
Other services not speci cally provided for above which are supplied while the foreign hunter is in the Republic are subject to VAT at the standard rate, unless the VAT Act speci cally provides for an exemption or zero-rating.
* Also see Interpretation Note No. 31 (Issue 3) dated 22 March 2013 ‘Documentary Proof Required for the Zero- Rating of Goods or Services’ (or as updated), for the meaning of the term ‘consigned or delivered’.
† In terms of paragraph 5.2(c)(ii) of Interpretation Note No. 30 (Issue 3) dated 5 May 2014 ‘The Supply of Movable Goods as Contemplated in Section 11(1)(a)(i) Read with Paragraph (a) of the De nition of ‘Exported’ in Section 1 and the Corresponding Documentary Proof’ (or as updated), the trophy has to be exported within seven months from the earlier of the time an invoice is issued or payment of consideration is received by the hunting out tter in respect of that supply where the trophy is subject to a subsequent process of preservation or mounting.
‡ As required under paragraph (a) of the de nition of ‘exported’ in section 1(1) and section 11(3), read with Inter- pretation Note 30.
§ Paragraph 15(2)(d).
¶ Refer to Part Two of the export regulation.
** Refer to Part One of the export regulation.
†† The taxidermist must ensure that the trophy is delivered to a designated harbour or airport. ‡‡ Refer to Part Three of the export regulation.
§§ Interpretation Note 31.
Juta’s IndIrect tax 2016 469