Sars seconds VAT exports warning

A NOTE from the SA Revenue Service (Sars) legal support team has confirmed the warning from Ralph Mattheus, export manager of Aspen Centralised Warehouse in Port Elizabeth, that value added tax (VAT) will be imposed on SA exports sent on an “ex-works” basis (FTW May 02/09, 2008). “Many people are still unaware that Sars expects you to raise VAT on exports if no documentary proof is provided that you – as the shipper – have delivered the goods directly to a foreign customer in his country,” said Mattheus. Send it “ex-works”, he added, and you will get hit with the tax. This was confirmed to FTW by Anand Bauchoo, law interpreter at Sars’ operations legal support. In the VAT Act, according to Bauchoo, a distinction is made between exports as defined in paragraph (a) –classified as ‘direct exports’– and exports as defined in paragraph (d) as ‘indirect exports’. “A direct export is where an RSA vendor supplies goods and consigns or delivers them to a recipient in an export country,” he said. “He must – in terms of section 11(1)(a) of the act read with paragraph (a) of the definition of ‘exported’ in section 1 of the act – apply the zero rate. “An indirect export is where the goods are delivered to the recipient in the Republic. The supplier must levy VAT at the standard rate (14%) in terms of section 7(1)(a) of the act. “Where the goods are exported through a designated port by the recipient, the recipient can apply for a refund of the VAT via the VAT refund administrator situated at the ports.” This because, in an indirect export, the recipient has control of the export process. If you want to know the compliance requirements, you must consult the export incentive scheme which can be accessed on the Sars website at www. sars.gov.za The best answer, it has been suggested, is for the supplier to ship the goods “free carrier (FCA)”.