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Do you know the sixteen supplies of goods you're allowed to zero-rate? - Check

by , 30 April 2013
A zero-rated supply is a supply of goods or services that the Vat Act allows you to charge Vat at zero per cent. In terms of the Act, there are only sixteen goods you're allowed to do this with. Read on to find out which items can be zero-rated, so you can do it correctly and avoid SARS penalties.

A zero-rate of Vat means you can charge Vat at a zero-rate on the supply of certain goods and services.

So what does that mean for your business? This means 'no additional amount of Vat will be added to the purchase price of zero-rated supplies and services,' says the Practical Vat Loose Leaf Service. So, basically Vat is nil.

But, there's a specific list of items you're allowed to zero-rate. It's important that you know what they are to avoid being on the wrong side of SARS.

Sixteen supplies of goods where you can apply zero per cent Vat

  1. Direct exports;
  2. Disposing of an enterprise or part of it as a going concern;
  3. Certain specified foodstuffs;
  4. Petrol or distillate fuel oil subject to fuel levy;
  5. The supply of illuminating kerosene (paraffin);
  6. The supply of certain goods for farming purposes;
  7. The sale of gold to the South African Reserve Bank, South African Mint and other registered banks;
  8. The supply of gold coins by the South African Mint, but not gold coins set into jewellery;
  9. The supply of goods to a branch or main business in an export country;
  10. Supplies to the Industrial Development Zones (where the direct export rules apply);
  11. Conversion of old order mineral rights;
  12. Income of foreign donor-funded projects;
  13. Supply of goods by a vendor to a non-resident where that vendor delivers the goods in South Africa;
  14. Compensation received from a public authority in terms of Section 19 of the Animal Diseases Act, 1984 to supply a 'controlled animal or thing' as defined in that Act to a public authority;
  15. Land reform and land restitution transactions; and
  16. Goods sold from a duty-free shop.

Remember, getting zero-rating wrong is costly. SARS will impose additional penalties and interest for every mistake made. Knowing the supplies of goods you're allowed to charge Vat at a zero rate is the first step to ensure you get it right.

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