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Five things every Vat vendor needs to know about zero-rated supplies

by , 01 September 2014
Contrary to popular belief, zero-rated supplies aren't the same as Vat exempt supplies.

These two supplies are treated differently by the Vat Act and have different results.

For the purposes of this article, we'll deal with zero-rated supplies.

Keep reading to discover the five things we believe every Vat vendor needs to know about zero-rated supplies - we promise this information will go a long way in ensuring you handle these supplies correctly and avoid steep penalties.

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What are zero-rated supplies?

Zero-rated supplies are supplies that output tax is charged on at 0%, says the Practical Vat Loose Leaf Service.

Sound confusing?

Here's a breakdown of zero-rated supplies…

Five must-know points about zero-rated supplies

#1: Zero-rated supplies are taxable supplies that are subject to Vat at a zero rate of 0% instead of the standard rate of 14%.

#2: A non-Vat vendor can't make a zero-rated supply.

#3: You CAN claim input tax deductions on related expenses of goods or services.

#4: Zero-rated supplies form part of your taxable turnover.

#5: Where you only make zero-rated supplies, you must still register for Vat if the value of your taxable supplies pushes you over the threshold.

Always remember this rule when it comes to zero-rated supplies: You can claim input tax and tax invoices you issue must show Vat at the zero rate.

There you have it: Now that you know the important points about zero-rated supplies, comply with the Vat Act so you can avoid SARS penalties.

For more information on zero-rated supplies, for example the documents you must keep (for legitimate zero-rating, you must keep detailed documentary proof), the 14 foodstuffs that are zero-rated and so much more, check out the Practical Vat Loose Leaf Service.

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