FAQ - 23 April 2015
21 April 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. Will exported goods be zero rated when a foreign customer arranges for the transportation?
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 export country.
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 12(6).
2. How do I apply to SARS for a non-profit company to be allowed to issue s18A tax certificates?
Q: How do you apply for a non-profit company to issue section 18A certificate for donations received? Which forms do you fill out and what supporting documents are required? Is there a specific office where these are submitted? I asked all these questions at the Boksburg SARS branch but could not be assisted. Your timely response will be greatly appreciated.
A: The form that must be used for the application is the same form (the EI 1 Application form) that is used for the approval of the non-profit company as a public benefit organisation. It is important to note that an organisation that is registered as Non Profit Company (NPC) does not automatically qualify for preferential tax treatment. An organisation will only enjoy preferential tax treatment after it has applied for and been granted approval as a Public Benefit Organisation (PBO) by the Tax Exemption Unit (TEU). The eligibility to issue tax deductible receipts is dependent on section 18A approval granted by the TEU, and is restricted to specific approved organisations which use the donations to fund specific approved Public Benefit Activities.
The tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 4) 9at the following linkhttp://www.sars.gov.za/AllDocs/OpsDocs/Guides/LAPD-Gen-G03%20-%20Tax%20Exemption%20Guide%20for%20Public%20Benefit%20Organisations%20in%20South%20Africa%20-%20External%20Guide.pdf ) provides useful information (Paragraphs 23 and 24).
The supporting documents needed are:
A Founding Document – which is either of the following:
Signed and Dated Constitution (if you are an Association of Persons)
Copy of the Memorandum of Incorporation and Articles of Association (if a non-profit company registered with Company Intellectual Property Commission (CIPC)).
Legible certified copies of a valid identity document of all three fiduciary responsible office bearers as well as the Public Officer / Representative (if different from that of the three office bearers).
A copy of a bank statement with original bank stamp or ABSA eStamped statement not more than three months old that confirms the account holder’s legal name, account number, account type and branch code where applicable; or if a taxpayer has opened a new bank account and cannot produce a bank statement, they will need an original letter from the bank on the bank letterhead with the original bank stamp confirming the account holder’s legal name, account number, account type, branch code and reflecting the date the bank account was opened.
Financial Statements must be submitted if the organisation has been in existence for longer than a year (and for each financial year that it has been in existence). If the organisation has been in existence for more than a year, but it has not been in operation (dormant), it must submit an affidavit with its bank statements.
Proof of residential or physical business address.
For the organisation; and
For the Public Officer (if not already registered with SARS as a taxpayer).
Disclaimer: Nothing in these queries and answers 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 answers, SAIT do not accept any responsibility for consequences of decisions taken based on these queries and answers. It remains your own responsibility to consult the relevant primary resources when taking a decision.