Customs

Sars on 19 March 2014 published a Draft Binding General Ruling on the Value-added Tax (VAT) treatment on the supply and importation of fruit and vegetables.



Zero-rated supplies: The supply of fruit and vegetables that have not been cooked or treated in any manner except for the purpose of preserving such fruit and vegetables in their natural state, is zero-rated under section 11(1)(j) read together with Item 12 (vegetables) and Item 13 (fruit) respectively. Fresh and frozen fruit and vegetables sold in the following forms qualify for zero-rating: cut (including fruit and vegetables cut in to specific shapes), diced, sliced, minced, shredded, crushed, and peeled. Frozen fruit and vegetables (this ruling does not extend to frozen potato products) which have been bleached in hot water for the purpose of preserving the fruit and vegetables in their natural state qualify for the zero-rating.



Subject to “standard rated supplies”, the zero-rating applies regardless of whether the fruit and vegetables are sold individually (for example, a punnet of strawberries or a pocket of potatoes or mixed (for example, mixed diced carrots and potatoes).



Standard rated supplies: The supply of fruit and vegetables in the following forms is specifically excluded from Item 12 and Item 13 respectively, and is therefore subject to VAT at the rate of 14% under section 7(1)(a), irrespective of whether the fruit and vegetables are supplied in the forms referred to in “Zero-rated supplies”. Fruit and vegetables supplied in the course of the furnishing or serving of any meal, refreshment, cooked or prepared food or any drink, so as to be ready for immediate consumption when supplied.



Fresh or frozen fruit and vegetables which have been treated with an additive for the purpose of adding colour or flavour (for example, glucose, dextrose, sugar or salt). Examples of supplies of fruit and vegetables that are subject to VAT at the standard rate include (i) the supply of a combination of fruit and/or vegetables packaged, advertised, marketed and sold as a salad or a platter (with or without a sauce or dressing)(for example, fruit salads and a mixed green salad); (ii) fruit smoothies; and (iii) fruit and vegetable juice.

This ruling will be applicable from date of issue of the final BGR and will apply for an indefinite period.

Comment is due by 15 May 2014.