Six documents to prove your zero rating, or pay 14% Vat to SARS
As a Vat vendor, you'll either charge Vat at one of two rates - the standard rate of 14% or the zero rate.
If you charge Vat at the zero rate, you need to make sure you're entitled to do so. And you must keep all your correct documents as proof.
If you don't, SARS will see the zero-rated invoice as a standard-rated one and will deem the amount to include Vat at 14%.
And then you'll have to pay that 14% over to SARS, plus additional penalties and interest.
But don't put yourself out of pocket. Read on to find out the six documents you need to keep so SARS allows your zero rating claim...
15 Supplies you can zero rate
Take control of your Vat:
Discover checklists, to save you time and ensure you don't miss a thing on:
- Zero-rated foods;
- Don't charge Vat on these 14 zero-rated foodstuffs;
- 4 important documents to keep for export between branches;
- 3 records for intergroup sales, and zero-rating;
- How to complete your Vat return; and
Before I tell you what documents you need, first let's look at what goods and services you can actually zero rate:
1. Direct exports;
2. Sale of a business as a going concern;
3. Gold bars sold to the Reserve Bank or another bank;
4. Petrol & diesel;
5. Certain foods;
7. Goods sold to businesses in a customs controlled area;
8. Certain mineral rights;
9. Certain payments from Government;
10. International transport and accompanying services;
11. Services relating to land situated in another country;
12. Services actually carried out in another country;
13. Certain services to non-resident clients;
14. Municipal rates; and
15. Winnings received by a race-horse owner from the operator of an event (Section 11 of the Vat Act).
And remember, SARS makes an allowance so you can claim all your relating input tax, even when the zero rate of Vat is applied.
Read on to find out what proof you need to keep so you can take advantage of this allowance.
Six documents to prove your zero rating to SARS
Have you checked your bank balance recently?
Derek did, and found R150 000 missing from it!
The culprit? SARS.
The reason? One simple Vat pop-up letter.
Because of the allowance to claim all your input tax, but charge zero output tax, SARS worries that vendors may try and abuse this allowance.
So the Vat Act clearly sets out that if you supply goods or services at the zero rate, you must keep documents which will prove your entitlement to do so.
1. A copy of the zero-rated tax invoice;
2. The order or agreement between the buyer and seller; and
3. Proof of payment.
Documents for exports:
4. Documents relating to the specific type of transport used – e.g. if the goods were sent by ship, then a bill of lading;
5. Proof that the goods were received by the foreign customer; and
6. Stamped Customs documentation proving the goods left South Africa.
But note: depending on the type of zero-rated supply, SARS might require some additional information, documents and/or forms. Find these in Chapter Z01: Zero-rated supplies in your Practical Vat Loose Leaf. Don't have one? Get one now, here and make sure you're covered...
P.S. Vat Guru Dee Bezuidenhout discussing in detail, zero-rated supplies and their impact on your business finances at the Vat Masterclass 2015.Book your seat here… But hurry, seats are filling up fast.