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Proposed relaxation of VAT export rules not all good news

07 June 2013   (0 Comments)
Posted by: Author: Clifford Watson
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Author: Clifford Watson (Grant Thornton)

SARS recently issued draft Interpretation Note (IN) no. 30 which sets out the time and documentary proof which is acceptable when exporting movable goods on the direct basis where the VAT vendor is in complete control of the export process. It also ensures that these goods are exported from South Africa (SA).

Included in the Interpretation Notes are proposed relaxations which include:

  • The general time to export the goods from SA is increased from 2 months to 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. 
  • Specific time rules for export relating to goods supplied progressively or in stages such as construction contracts or where the goods are subject to a process of repair, improvement, erection, manufacture, assembly or alteration. There are also industry specific time of export rules proposed relating to professional hunters and suppliers of tank containers.

Extensions and exceptions 

The draft Interpretation Note also makes provision for the extension of such periods in specific circumstances beyond that vendor’s control, subject to an application to the Commissioner prior to the expiry of the initial period.

Vendors are also now allowed additional time to obtain the required documentary proof to substantiate the zero rating. While legislation currently allows three months, the draft Interpretation Note proposes an increase to 90 days calculated from the date the movable goods are required to be exported from SA i.e. 90 days to export and a further 90 days to obtain documentation, which ultimately will increase the time allowed to 180 days.

Currently, vendors are allowed one year to obtain all the documents required to claim back VAT on export sales. If they are unable to do so within the one year limit, they are forced to account for VAT as if the export sale was subject to 14% VAT. The draft Interpretation Note however proposes that this period is extended to the standard five year period in which to claim VAT. This means that, where vendors manage to obtain the remaining documentation, they have five years during which they can then claim back the VAT that they previously declared on the export transactions.

The draft Interpretation Note also makes provision for vendors not to account for 14% VAT on the export transactions in certain instances where the vendor does not obtain the required proof of payment for the total consideration within the required period. Examples include situations where the vendor entered into a payment agreement with its customer and obtained the required Reserve Bank exchange control approvals or where the vendor has written off the debt.

Where the draft note does not make provisions for an organisation’s specific circumstances, it is advisable to approach SARS for a ruling prior to applying the zero rate and possibly exposing the organisation to penalties and interest. 

SARS has also proposed the draft Export Incentive Scheme to relax the indirect export rules to also include indirect exports via road and rail at the zero-rate.

Unfortunately, this is not all good news. All the relaxations in the rules come with a number of additional and demanding requirements which should be adhered to avoid penalties and sanctions. The current versions of Interpretation Note no. 30 (Issue 2) and the Export Incentive Scheme are still effective until the new versions are issued. Vendors should ensure that they still comply with the current requirements set out in these publications until they are withdrawn.

SARS Commissioner, Mr Oupa Magashula’s comment that "the economic outlook remains muted and it will have to unleash in order to come near the target,” indicates that SARS will go full out to meet its increased revenue targets. Vendors need to ensure that they are fully compliant with tax requirements, especially when it relates to exports and cross border transactions.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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