GUIDE TO: VAT and Export
Are you a exporter who is also registered as a VAT vendor?
Whether or not to charge VAT on an export is not always an easy call. Let’s look at when your foreign client should pay the VAT, and in what circumstance you can charge the zero VAT rate on an export.
VAT and export implications
We will be referring to two parties in this guide, namely the “supplier” and the “purchaser”. The supplier is the party offering the goods for sale to be exported, whereas the purchaser is the party buying the goods from the supplier.
VAT on goods exported is normally charged at a rate of 15% (standard rate), or 0% (zero rated). When exporting goods from the RSA to any export country, you have to distinguish between two types of exports, called direct and indirect export.
*Note that for the Cartage contractor to qualify, transport must be his main activity, and he must be registered as a VAT vendor
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A direct export happens when the supplier, or a cartage/carrier provider arranged by the supplier, delivers the goods to a client at an address in an export country. The supplier will be in total control of the export and is responsible for all aspects of the exportation.
In order for the local VAT vendor to forego VAT and export at the zero rate, the vendor must:
- Export the goods via a designated commercial port (see list below) within the prescribed time period set by SARS
- Acquire and keep the required documentation
An indirect export is where the recipient (from the export country) removes or arranges for the removal and transportation of the goods purchased in the RSA to an address in an export country. In this case the supplier must add the 15% VAT and the recipient may then claim a refund from the VAT Refund Administrator (the VRA).
The supplier may otherwise choose to supply the goods to the purchaser at the zero rate (no export VAT). This can be done when the supplier is able to ensure that the goods are delivered to a harbour or airport which is a “designated commercial port” (from the list below), from where the goods will be exported by the purchaser.
To forego the VAT and export at a zero rate carries some risk. As the supplier will be held accountable if the conditions for zero rating are not met, it is up to the supplier to decide whether to apply the zero rate, or to apply the standard rate.