SARS Interpretation Note : Documentary Proof required for the Zero Rating of Goods and Services
Should a vendor wish to apply the zero rate on goods and services exported, in addition to a valid tax invoice, certain other documentation needs to be obtained and retained by the vendor in order to substantiate the entitlement to apply the zero rate.
The documentation required is laid out in SARS Interpretation note 30, 31 and Regulation R 316. This documentation needs to be obtained within 90 days from the earlier of the time an invoice is issued or any payment of consideration is received in respect of that supply.
Should the vendor not acquire the required documentation within the 90-day period, output VAT needs to be declared on the consideration i.e. the consideration will now be deemed to include VAT. This needs to be reflected as an adjustment on the VAT return under Block 12.
A vendor could apply to the commissioner to request approval of alternative documentary proof that may already be obtained by the vendor. This application needs to be done before the expiry of the 90-day period.
A vendor that is unable to comply with the 90-day period must submit an application within 30 days from the expiry of the original 90-day period substantiating why the application could not have been submitted timeously
Should the documentation required be a proof of payment, the vendor does not need to declare output VAT if the proof of payment is not received for supplies that require the relevant approval from the South African Reserve Bank, provided that all regulations are complied with as set out by the Reserve bank
Should the vendor subsequently receive the required documentation within 5 years from the end of the VAT period during which the original invoice was issued, the output VAT previously declared can now be claimed as an input VAT adjustment under Block 18 on the VAT return at the VAT rate in force at the date of the issue of the tax invoice.
Should you wish to ensure that you are compliant with SARS requirements regarding the zero rating of exports, please contact Fatima Bapukee at our offices to perform a documentation check with you.