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Avoid making these 2 common VAT mistakes with basic foodstuffs

by , 06 March 2016
Alright, so let's clear the air of an issue which SARS is finding very annoying.

You see, feedback from SARS indicates that they're picking a ton of mistakes which vendors are accidentally making mistakes regarding VAT and basic foodstuffs.

But the truth is that ignorance is not an excuse here.

So take note 2 common mistakes regarding VAT and basic foodstuffs and makes sure SARS doesn't hit you with additional tax and penalties...


Did you declare for zero-rated supplies? Get ready to be audited by SARS three times this year
SARS sent over two million letters to Vat vendors, primarily selecting them for a desk audit. But yet, there are only 770 000 Vat vendors.
That means, on average, you could receive this letter about three times in one year!
Here's how to make sure you have the proof to satisfy SARS' requirements for zero-rated supplies!

Common mistake#1:

Many vendors all-too-often forget that standard-rated ingredients are added to a zero-rated product, this will change the supply's nature.

This means that they'll have to charge VAT at the standard rate on the supply, despite the fact that the primary ingredient is zero-rated.


Selling a pack of plain fresh vegetables will be zero-rated.

But if you add, let's say flavoured butter, then the supply will be at the standard rate.

Another example could be if you flavour rice to make a peri-peri rice. The rice itself is xero-rated, but the rice with the added flavouring will be standard-rated.

Common mistake#2:

Many forget that if you sell zero-rated foodstuffs as a meal which prepared and ready to consume immediately, such as takeaways or convenience food, you must charge VAT at the standard rate of 14%.


A shop sells potatoes which are already prepared for consumption, with added spices and butter. So even though potatoes are, in themselves, zero-rated, the shop will have to sell them at the standard rate of 14%.

Another example could be fresh and frozen fruit. This is zero-rated. But if you cut it up, and mix it together for sale as a 'fruit salad', then you'll have to charge VAT at the standard rate.
*So those were 2 very common VAT mistakes when it comes to basic foodstuffs.

Avoid them and in so doing, avoid unnecessary additional tax and penalties, courtesy of SARS.

To learn much more on what's subject to VAT, and what's not, simply page over to chapter T 03: Taxable Supplies in your Practical VAT
Loose Leaf Service

If you don't have it, don't worry. Simply click here to get your hands on this invaluable VAT resource today.

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