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Five documents you MUST have to prove your zero rating of Vat to SARS

by , 06 May 2015
It's all very well to know which items are zero-rated for Vat purposes. But did you know, the vendor who charges Vat at the zero rate must keep proof of the zero rating?

(Paragraph (3), Section 11 of Vat Act (that's the section that tells you what's zero-rated)

If you apply the zero rate of Vat to a transaction, you must keep details of that transaction, along with the necessary forest of paper work, so you can explain to SARS why it should allow you to charge Vat at the zero rate. If you didn't know this, you're not alone. Not many people do.

Here's what you need to prove your zero rating!


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Checklist: Five documents you MUST have to prove your zero rating

In Interpretation Note 32, SARS outlines which of these five documents it needs and for which items.
  1. The tax invoice – the most important document!
For ANY zero-rated transaction, you need your copy of the zero-rated tax invoice.
  1. Proof of payment
In all the zero ratings checks it's carrying out, SARS is looking for proof of payment. It wants proof that the transaction actually took place. But while there's been a long-standing perception among vendors and Vat auditors that the payment must be from a foreign source, the law doesn't demand this!
SARS simply wants proof of payment and it can be from a local source.
  1.  Some sort of contract or agreement 
For most zero-rated supplies, whether of goods or services, SARS will be looking for a contract or an agreement between the parties. This could take the form of, for example:  an order, a sale agreement, an agreement between a Government Department and the vendor.
  1. For exports and foreign transport, you need forms from Customs...
You'll also need documents from Customs e.g. an SAD 500. These – and the applicable transport documents – for example, a road manifest, a bill or lading – must be stamped by Customs.


 BREAKING NEWS: SARS introduces more changes to the VAT return

Are you 100% sure you've covered all your bases?

All it takes is putting a zero in the wrong place on your VAT return to get in trouble with SARS – and even trigger an audit!
Don't let this happen to you!

Avoid simple yet costly mistakes with this number one resource no business should be without!

  5. SARS also requests an additional three forms: 
  • A Vat 262 form
Make sure you complete the 1st copy page in full – especially parts A to D. This is for goods forming part of a repair which is supplied for goods temporarily admitted into South Africa. For example, a car which comes in for repairs.
  • A Vat 267 form
Make two copies – one for Customs and one for your records, and have both stamped by Customs. This is for goods used exclusively in an export country or in the customs controlled area (CCA) of an industrial development zone.
But, once again, in true SARS fashion, these forms are NOT available on the SARS website. You have to call SARS and request them.
  •  A Vat 103 notice of registration (applies only to farmers, forestry and agriculture)
Again, you need two copies of this one. It's for agricultural goods, sold to a vendor who qualifies to buy it at the zero rate. The buyer must give a copy of the Vat 103 notice to the seller. The notice will include a paragraph, usually at the bottom of the page, which indicates that the buyer's enterprise is an agricultural one. 
  • Get the timing wrong, and you'll be coughing up extra Vat!
SARS goes on to say that if you've applied the zero rate of Vat to goods and/or services, that you must obtain documentation as specified, at the time you show the zero-rated sale on the relevant Vat return (except for goods exported, but that's another story). 
If you don't, you'll have to pay the Vat over in the meantime, until you do get the documentation!
You may, though, apply to the  SARS office, where your are registered, for extensions in obtaining documents – but given its track record in replying to vendors, you'll probably have obtained ALL your documents by the time they reply to you! 
To keep up-to-date with the latest Vat changes and interpretation notes, click here

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