n Business Tax and Company Law Quarterly - Value-added tax and the export of goods : there be dragons too!

Volume 1, Issue 2
  • ISSN : 2219-1585


While most vendors are aware that they are required to issue valid 'tax invoices' in respect of every taxable supply made by them that exceeds R50 in value, few seem to be aware that in order to claim zero-rated status, the supply must not only meet the requirements of section 11(1) and (2) of the VAT Act, but the vendor must also obtain and retain certain prescribed documentation. In absence of this documentation, the supply will not qualify for zero-rating. SARS Interpretation Note 31 prescribes the documentation that must be held by the vendor to generally substantiate zero-rating. However,when it comes to the export of goods, separate documentation is required, depending on the manner in which the goods are exported. In the case of a so-called 'direct export', the documentation prescribed in SARS Interpretation Note 30 must be available, while in the case of an 'indirect export', the documentation prescribed by the VAT Export Incentive Scheme must be held by the vendor to substantiate zero-rating. The importance of a vendor meeting these documentary requirements cannot be overemphasized. This aspect of zero-rating provides a happy hunting ground for SARS auditors, who easily re-characterize zero-rated supplies as standard-rated supplies on the basis of a single prescribed document being absent. This article highlights the documentary requirements that apply in the case of the export of goods and points out areas that need special attention by vendors.

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