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Which VAT rates do you apply to indirect and direct exports?

by , 08 March 2016
When it comes to VAT, exports can be a tricky area to get right.

When you're going to export goods, you need to consider which VAT rate you're allowed to charge.

This would be either the standard VAT rate of 14% or the zero rate (0%).

And in order to determine which rate to use, you'll need to know whether the export is DIRECT or INDIRECT.

Failure to know this critical difference can see you being held liable for heavy penalties and interest.

Having said, let's take a look at these definitions and ensure you understand them correctly in applying the right VAT rate...

*****MUST HAVE*****

Did you declare for zero-rated supplies? Get ready to be audited by SARS three times this year
SARS sent over two million letters to Vat vendors, primarily selecting them for a desk audit. But yet, there are only 770 000 Vat vendors.
That means, on average, you could receive this letter about three times in one year!
Here's how to make sure you have the proof to satisfy SARS' requirements for zero-rated supplies!
Direct export: Is when the seller of the goods, a South African VAT vendor, delivers, or arranges and pays for the delivery of the goods to the client at a foreign address.

In this case, VAT can be charged at the zero rate.
Indirect export: is when a foreign buyer of the goods, a non-resident of South Africa,  collects the goods themselves in South Africa, or if they arrange and pay for the goods to be delivered to an address in their foreign country.

In this case, the South African seller must charge VAT at the standard rate. Beyond that the seller has no further responsibilities. It'll be up to the buyer to claim a refund on the VAT.

NOTE: If you charge VAT at the zero rate on a direct export, you'll be required to keep several documents in order to make SARS happy.

To find out what these documents are, go to chapter E 02: Exports in your Practical Tax Loose Leaf Service handbook.

Don't already have it? No problem!

Simply click here to get your hands on a copy of this invaluable resource today. 

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Which VAT rates do you apply to indirect and direct exports?
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