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Do you know how to charge Vat to tourists?

by , 02 September 2013
Do foreign tourists pay Vat when they come to South Africa? Are there certain items they can get free of Vat? Read on and find out how to charge Vat to tourists so you can comply with the Vat Act.

If you have tourists that buy goods from you, it's important you know how to charge Vat. The last thing you want is to be on the wrong side of the Vat Act.

Here's how to charge Vat to tourists correctly

Firstly, it's important to remember that Vat in South Africa is levied on the supply of goods and services, says the Practical Vat Loose Leaf Service.

So if you sell goods to non-resident tourists, you must keep in mind these sales may qualify as exports for Vat purposes.

When dealing with the export of goods, you can charge Vat at either the 14% standard rate, or Vat at the zero rate. You determine the rate of Vat you charge by identifying whether the export is a direct (by you) or an indirect export (by the customer).

What is a direct export?

If the export is direct, the seller of the goods (the South African Vat vendor) delivers or arranges and pays for the delivery of the goods himself to an address of his/her customer in a foreign country.

In this case Vat is levied at the zero rate (0%). You may recover the postage or courier charges also zero-rated from the customer.

Remember to keep proof of export (as the South African seller).

What is an indirect export?

With indirect exports, the foreign (non-resident) buyer of the goods takes the goods himself in South Africa, or arranges and pays for the delivery of the goods to his address in his foreign country.

In this case, the seller levies Vat at the 14% standard rate. The seller has no further responsibility and it's up to the buyer to claim a refund for the Vat.

Well there you have it. That's how you would charge Vat to foreign tourists. Make sure you comply.

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