South African Vat vendors often perform services for foreign-owned aircraft, vehicles, trains or ships.
These services include:
The Vat Act defines these as a foreign-going aircraft and a foreign-going ship.
So what are the Vat implications if you perform services on foreign owned aircraft, vehicles, trains or ships?
For example, Fresh Air Cleaners, a Vat-registered vendor, provides a local airport with cleaning services for aeroplanes that land on South African soil from international destinations. It applies the zero-rate for Vat on its invoices if the aeroplanes are owned by foreign companies and registered in foreign countries.
But if an aeroplane owned by a local company and registered in South Africa arrives from a foreign country and is serviced by Fresh Air Cleaners, Vat must be charged at the standard rate of 14%.
Here's another example: South African Sea Repairs is a local company. It paints the hull of the 'Paradise', a foreign-registered ship that's berthed in the Durban harbour. Sea Repairs will levy Vat at the zero rate on its invoice. If a locally owned ship is serviced by Sea Repairs, Vat will be levied at the standard rate of 14%.
Now that you know the Vat implications for services done on foreign owned aircraft, vehicles, trains or ships, make sure you comply with Vat law to avoid penalties and interest.
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