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Own a legal practice? Here's how to apply the zero-rate if you render services to non-South African residents

by , 02 June 2014
Special rules apply to legal practices. This includes applying the zero-rate on certain services. If you get this wrong, you'll incur SARS penalties.

Since you can't afford to go down that road with SARS, continue reading to find out how to apply the zero-rate in your legal practice if you render services within South Africa to non-residents.

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Errors in Vat invoices could cost you thousands!

Are there any inaccuracies in your Vat invoices? You may be charged a very high penalty!

Click here to find out how to make sure your Vat invoices are 100% legal.

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Your legal practice must apply the zero-rate to services rendered to non-residents as follows
 

The Practical Vat Loose Leaf Service explains that the zero-rate applies when your client is a non-resident and isn't in South Africa at the time you render the service.

Here's an example of how it works: Legal Trust performs services for Colonel K, a British resident. Colonel K isn't in the country at the time Legal Trust renders the services and the services aren't in connection with fixed or movable property situated in SA.

This means, Legal Trust can apply the zero-rate of Vat on its invoice to the client because he's a non-resident.

But, there's an important point you must keep in mind when you apply the zero-rate in your legal practice. If you overlook this, SARS will definitely come after you…

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Think Vat doesn't apply to your payroll?

You're wrong!

Avoid this common error and keep SARS away from your door at audit time.

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The zero-rating doesn't apply in this instance

The zero-rate doesn't apply if the services are in connection with fixed or movable property inside South Africa, even if the owner is a non-resident.

So if, for example, Colonel K consults with Legal Trust inside South Africa, or if the services are in connection with fixed or movable property inside the country, SARS won't allow the zero-rate. In this case, the legal practice must levy 14% Vat on the invoice.

Now that you know how to apply the zero-rate when you render services to non-South African residents, comply to avoid SARS penalties.

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