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How to declare Vat for export sales

by , 06 May 2015
Let's look at the situation of declaring Vat for exporting sales. A certain company sells goods to a company in Zimbabwe. The company issued an invoice in U.S. Dollars.

Now, do they put the sale through on the zero rate if the Zimbabwean company uses their own transport to collect their goods? The company says the sale isn't zero-rated, but standard rated.

If it's standard rated, when declaring the sale value on the VAT201 return, will they have to convert the U.S. dollars to Rands at the exchange rate on the date of invoice?

Also, the Zimbabwean company will only pay the company 60 days after delivery of the goods. And they'll pay them based on the exchange rate on date of payment.

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So the receipt of the funds may result in an under/over declaration on the VAT201 return if the company declares the sale on date of invoice.

Here's our answer:

You are correct in that the sale is standard-rated. The Zimbabwean client can claim the Vat back at the point of exit from the country. Also show the Vat in Rands.

Because the sale is standard rated, you can invoice them in U.S. Dollars, but you must invoice them in Rands. You can only issue a zero-rated invoice when the supply is zero-rated.

Keep in mind that your time of supply is the earliest of issue of an invoice or any payment received. Therefore, you need to convert to Rands at the time of supply.

Also, the loss/over recovery when you receive payments is treated as a Vat exempt amount and it's for this reason that SARS wants you to issue standard-rated invoices in Rands – so there's no hardship later on for you.

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