Will exported goods be zero rated when a foreign customer arranges for the transportation?
21 April 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: If a company
exports good across the border and the customer sends their own courier to
collect the goods and take them across the border, can this sale be "zero
rated” for VAT or must the company use their own courier to have it zero rated?
Or must VAT be charged and the VAT reclaimed at the border?
A: We submit that
what we have here is what was previously referred to as an indirect export or a
paragraph (d) of the definition of export supply. In terms of the definition of export in
section 1(1) of the Value-Added tax Act "exported”, in relation to any movable
goods supplied by any vendor under a sale or an instalment credit agreement,
means (d) removed from the Republic by the recipient for conveyance to an
The rate of zero per cent will then apply, assuming the
required documentary proof will be obtained, if the supplier has supplied the
movable goods in terms of a sale or instalment credit agreement and by the
recipient the goods have been exported by the recipient and the supplier has
elected to supply the goods at the zero rate as contemplated in Part 2 of an
export incentive scheme referred to in paragraph (d) of the definition of
"exported” in section 1(1).
Regulations were issued on 2 May 2014 (Gazette 37580, notice
316) prescribing the application of paragraph (d) of the definition of
"exported" in section 1(1) read with section 11(1)(a) of the
Value-Added Tax Act, with the regulations in the attached Schedule..
Principally the recipient must not be a resident of the RSA
and Part Two (Section B of the regulations) applies where a vendor supplies
movable goods to a qualifying purchaser and those goods are to be exported from
the Republic by the qualifying purchaser's agent and the vendor elects to levy
tax at the zero rate on the supply of the goods. Paragraph 12(4) and 12(5) of section B set
out the obligations of the agent or cartage contractor before the rate of zero
per cent can apply. Note that the
qualifying purchaser must also comply with the requirements in paragraph
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