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Are you making this common Vat mistake when it comes to illuminating paraffin?

by , 04 April 2014
Vendors are often confused by the VAT rules that apply to different heating and lighting fuels. Don't make the same mistake! SARS will punish you harshly if you get the Vat treatment wrong. Continue reading to find out how to handle Vat when dealing with illuminating paraffin.

Avoid this Vat mistake when it comes to illuminating paraffin

Warning: Don't charge Vat on the sale of illuminating paraffin! It's a zero-rated supply.

Many vendors are guilty of this mistake. So don't fall into the same trap.

Why are they confused? Because zero-rating only applies to illuminating paraffin. Any other forms of paraffin, or a product where illuminating paraffin has been mixed or blended with any other fluid or substance, will be a standard-rated supply.

But how can you be sure you're getting this right?


Any person who is liable to register for Vat but fails to do so is guilty of an offence and may be liable to a fine or two years imprisonment.

Don't get caught out!


Keep these points in mind to avoid mistakes when dealing with illuminating paraffin

'If you supply any goods or render any services to which the zero-rate of Vat applies, you must have documentation that can prove to SARS that the zero-rating of Vat is substantiated,' says the Practical Vat Loose Leaf Service.

This principle also applies here since illuminating paraffin is a zero-rated supply.

If you're confused about whether or not to charge Vat for a supply or service, use this failsafe method to solve your dilemma in two easy steps:

Step #1: Always look for the Vat status of the seller or supplier first. If the seller is registered for Vat, the sale or service will be a taxable supply and Vat must be levied on the transaction – whether at the 14% standard rate or at the zero-rate (0%).

Step #2: Then ask yourself if the supply is an exempt supply. Exempt supplies have no Vat charged on them, compared to standard and zero-rated supplies, which have Vat levied at a rate of 14% and 0% respectively.

There you have it. Now you know that you must never charge Vat on the sale of illuminating paraffin because it's a zero-rated supply.

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