After considerable to-ing and fro-ing last year on the issue of how imports and exports should be treated for VAT purposes, the South African Revenue Services (SARS) has published its final position.
It appears that all previous practice notes and media statements on the issue must be disregarded, and only the Government Gazettes issued on November 13, 1998 and January 4, 1999, read together with the VAT Act, must be followed.
So if you export or import what do these provisions mean for you?
There are two types of exports direct and indirect.
If you export goods and pay a transport contractor to take them outside South Africa, you are the exporter and there is no doubt that the goods have been exported. This is known as a direct export and you must issue an invoice reflecting that VAT is charged at zero percent.
If you sell the goods to a customer who exports the goods, the export is known as an indirect export. In this instance you must issue the invoice with VAT at 14 percent.
You may only charge VAT at zero percent if you deliver the goods to a harbour or airport, or the goods are supplied by means of a pipeline or electrically.
If you have charged 14 percent, your customer may claim a refund of the VAT from the VAT Refund Administrator within three months of exporting the goods. (The goods must have been exported within 90 days of the sale.)
If you have charged zero percent VAT and you do not obtain proof from the Controller of the RSA Customs and Excise that the goods have been exported within two months of you issuing the tax invoice, you will have to pay 14 percent of the selling price of the goods to the taxman.
It is therefore very important to know that the goods will be exported and you must retain all the export documentation for five years.
Special rules relating to liquor and cigarettes were brought in late last year, but it seems that these have not been reinstated. Similarly, the provisions relating to export trading houses have also fallen away. The treatment of exports to Botswana, Lesotho, Namibia or Swaziland is now the same as it is to any other country.
Previously, if you didn't import via a customs point where the VAT was levied, you were required to pay the VAT with the first VAT return you submitted after importation of the goods.
The Government Gazette of January 4 1999 has changed the rules and now you must import via a customs point which will levy the VAT on importation. So if you are importing goods from the Botswana, Lesotho, Namibia or Swaziland, you must import at certain border posts.
Another point to remember about importation relates to services. If you are a registered VAT vendor you don't need to worry about VAT when you are charged for services from abroad. But if you are not registered, you must pay VAT within 30 days of being charged for the service. Similarly, if you are registered, but use the services to make exempt supplies, you must account for the VAT on the importation.