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14 things you need to know about charging Vat at the zero rate

by , 28 May 2015
It's essential to always know and understand how to levy Vat for your business. It's not as easy as applying the same treatment other vendors use.

Thus, keep in mind that the zero-rated supply is a supply of goods or services that the Vat Act allows you to make with Vat at zero per cent (Section 11 of the Vat Act).

There are certain services you supply to nonresidents that are zero-rated

To avoid the mistake Master Currency made, let's take a look at 14 services you can zero rate (Section 11(2) of the Vat Act).

Here are the 14 services you can zero rate!

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Are there any inaccuracies in your Vat invoices? You may be charged a very high penalty!

If SARS finds inaccuracies, you'll be assessed, held liable to penalties, interest and possibly even additional tax!

Click here to find out how to make sure your Vat invoices are 100% legal.


You can zero rate the following services:

1. Services physically rendered in an export country;
2. Certain services you supply to non-residents;
3. The international transport of goods or passengers;
4. Services connected with the transport of goods within South Africa;
5. Insuring or the arranging of the insurance or the arranging of the international transportation of passengers or goods;
6. Services you supply directly in connection with land or improvements to land in an export country;
7. Services relating to movable goods situated in an export country, but temporarily imported into South Africa;
8. Services you supply to non-residents and nonvendors in connection with repair, maintenance, cleaning or re-conditioning foreign going ships or aircraft and containers;
9. Services you supply to non-residents and nonvendors in connection with handling, pilotage, salvage, towing, operating or managing foreigngoing ships or aircraft and storage, repair,
maintenance, cleaning or providing of containers;
10. Arrangement of certain activities for non-residents;
11. Repairs to trains operated by non-residents;
12. Services you supply to a branch or main business situated in an export country;
13. Services relating to goods under warranty where you provide services to a non-resident warrantor who's outside South Africa at the time the services are rendered;
14. Vocational training of employees where the employer is non-resident and not a vendor;

Keep in mind this! Make sure you have all your documentary proof of the zero rating and that it's 100% correct.

What are the penalties you can get for getting the zero rating wrong?

If you don't have your documents correct, SARS will see the zero-rated invoice as a standard-rated one and will deem the amount to include Vat at 14%. So you'll have to pay the output tax over to SARS on the amounts you received.

Moreover, SARS will charge you additional penalties and interest. So you'll end up losing money, as you're out of pocket by the 14% Vat you must now pay extra.

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