Must repair services done in RSA for a foreign company be zero-rated?
09 March 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: My client (a
CC) is a VAT Vendor in South Africa and on a regular basis does work for his
client (a company located in Congo). The truck will come across the border from
the Congo and my client will in South Africa do refurbishment and repairs on
the truck. The truck will then again go over the border back to Congo. My
client will invoice the Congo client and they pay via EFT.
Must my client charge VAT to his client in the Congo?
supplied to a non-resident (not physically rendered outside South Africa) may
only be zero-rated if the services are supplied directly to that non-resident,
or any other person, and both the non-resident and the other person are not in
South Africa at the time the services are rendered.
Where services are supplied to a non-resident who is not in
the RSA at the time the services are rendered, the supply will qualify for the
zero rate [section 11(2)(ℓ)]. Note that the standard rate will apply where the
services are directly in connection with:
property (land and improvements) situated in the Republic; or
property which is situated in the RSA at the time the services are rendered.
However, the services supplied may still qualify for the zero rate if:
- the said movable property is subsequently
- the services supplied by the RSA vendor forms
part of a supply by the non-resident to the recipient vendor and the services
are acquired wholly for taxable purposes by that recipient.
Where goods are temporarily admitted into the RSA for
processing, repair, cleaning or reconditioning, the services supplied directly
in connection with those goods are zero-rated. Any goods which are consumed or
permanently affixed to those goods as a consequence of the services being
rendered will also be zero-rated.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.