To avoid liability, penalties and interest you must ensure you get the Vat treatment of exports right.
Here's are six tips you can use to handle Vat on direct and indirect exports correctly
Top tips to remember when dealing with a direct export:
#1: According to the Practical Vat Loose Leaf Service, direct exports are exports of goods that you've supplied and delivered to or consigned to the foreign recipient at an address in an export country.
#2: To 'consign' them in these circumstances, you have to engage and pay a contractor. Remember that the contractor must be registered as a Vat vendor in South Africa.
#3: Make sure you keep the documents as proof of the export and then zero-rate your export.
Keep in mind that zero-rating doesn't apply to the export of second-hand goods if you claimed a notional input tax deduction when you acquired them.
When exporting second-hand goods, also as a direct export, you should account for output tax equal to the amount of the notional input tax you claimed on acquisition of the goods.
So what should you keep in mind when dealing with an indirect export?
#4: Indirect exports are those that you don't deliver or 'consign' as set out above.
#5: Indirect exports are subject to Vat at the standard rate. This excludes goods you deliver to a designated port or harbour to be exported by the recipient from there in terms of the Vat Export Incentive Scheme. In that case, you may choose to zero-rate.
#6: The second-hand goods limitation mentioned under direct exports above also applies in this case. The recipient won't be entitled to a refund of the full amount of Vat levied.
Use these tips to cover all your bases when dealing with direct and indirect exports.