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Value-Added Tax Act, 1991 (Act No. 89 of 1991)

Regulations

Regulations issued in terms of section 74(1) read with paragraph (d) of the definition of "exported" in section 1(1) of the Value Added Tax Act, 1991

VAT Export Regulations

Part Three

16. Time period to obtain documentary proof (applicable to Parts Two - Section A and Two - Section B)

 

(1) The vendor electing to supply movable goods at the zero rate as envisaged in Parts Two - Section A and Two - Section B of these regulations or the qualifying purchaser's agent, whichever is applicable, must obtain the stipulated documentary proof within a period of 90 days calculated from the date the movable goods are required to be exported as contemplated in paragraph 15 and retain the required documentation as contemplated in section 55 of the Act and Part A of Chapter 4 of the TA Act.

 

(2) In the event that the required documentary proof is not obtained by either the vendor or the qualifying purchaser's agent within the prescribed period set out in subparagraph (1), the requirements of section 11(3) are not met and VAT therefore could not have been levied at the zero rate in terms of section 11(1).

 

(3) As a result, the vendor is required to account for output tax on the supply. The output tax is calculated by applying the tax fraction to the consideration for the supply. The vendor must include the amount of output tax in Block 12 of the return for the tax period in which the said period of 90 days ends.

 

(4) Should the vendor or agent, as the case may be, receive the documentation in respect of which output tax was calculated in terms of subparagraph (3) within five years from the end of the tax period during which the original tax invoice in respect of that supply should have been issued, the amount calculated in subparagraph (3) may be deducted as an adjustment in Block 18, of the return for the tax period in which this documentation is received: Provided that the vendor must be able to provide proof to the Commissioner that the vendor—
(a) has made the taxable supply for a consideration in money;
(b) has furnished a return in respect of the tax period for which the output tax calculated in subparagraph (3) was payable; and
(c) has properly accounted for the output tax on that supply as contemplated in subparagraph (3).

 

(5) For purposes of Parts Two - Section A and Two - Section B, the Commissioner may extend the period within which the required documentary proof must be obtained by the vendor where such documentary proof has not been obtained within the prescribed period set out in subparagraph (1) due to circumstances beyond the control of that vendor. The vendor must, before the expiry of the 90-day period as set out in subparagraph (1), submit a written application to the Commissioner either by e-mail to [email protected] or by fax to 086 540 9390 requesting a binding private or binding class ruling confirming the extension of the aforementioned 90-day period. Such an application must contain the circumstances that prevented the vendor from obtaining the documentation timeously.

 

(6) The vendor having obtained all the other required documentary proof is not required to account for output tax as a result of not obtaining the required proof of payment for the full consideration within the period set out in subparagraph (1), where—
(a) the vendor has entered into a written contract with the qualifying purchaser for the payment of the consideration in respect of the supply to be made after or over a period exceeding the 90 days but not exceeding 6 months;
(b) the vendor has entered into a written contract with the qualifying purchaser for the payment of the consideration in respect of the supply to be made after or over a period exceeding 6 months but not exceeding 12 months and has the relevant approval from a dealer in foreign exchange authorised by the South African Reserve Bank;
(c) the vendor has entered into a written contract with the qualifying purchaser for the payment of the consideration in respect of the supply to be made after or over a period exceeding 12 months and has the relevant approval from the South African Reserve Bank;
(d) a written contract provides for a retention amount to be withheld for a period exceeding the 5 years due to the nature of the goods supplied and proof of payment of the retention amount has not been obtained;
(e) the qualifying purchaser is unable to effect the payment due to the restrictions imposed on foreign exchange by the country in which the qualifying purchaser conducts its enterprise;
(f) the vendor has the relevant approval from the South African Reserve Bank or a dealer in foreign exchange authorised by the South African Reserve Bank not to repatriate any foreign currency in respect of that supply;
(g) in the case of exports via air or sea, the time of export has occurred but the movable goods have not yet been removed from the Republic. This exception is limited to a period of 6 months from the time of export; or
(h) the vendor has written off the said consideration as irrecoverable.

 

(7) The vendor must obtain and retain a copy of the relevant approval referred to in subparagraph 6. The aforementioned approval does not have to be obtained where the movable goods are exported to a country falling within the common monertary area as defined in SARB's Exchange control manual as updated.

 

(8) In the event that the proof of payment of the full consideration is not obtained by the vendor within the prescribed periods set out in subparagraph (6), excluding subparagraphs (f) and (h), the vendor would not comply with the requirements of these regulations and is therefore not allowed to levy tax at the zero rate in terms of section 11(1).

 

(9) As a result, the vendor is required to account for output tax on the supply to the extent of payment not received. The output tax is calculated by applying the tax fraction to the outstanding consideration for the supply. The vendor must include the amount of output tax in Block 12 of the return for the tax period in which the said period ends.

 

(10) Should the vendor receive the documentation in respect of which output tax was calculated in terms of subparagraph (9) within the extended period approved by a dealer in foreign exchange authorised by SARB or approved by SARB, limited to a period of five years from the end of the tax period during which the original tax invoice in respect of that supply should have been issued, the amount calculated in subparagraph (9) may be deducted as an adjustment in Block 18, of the return for the tax period in which this documentation is received: Provided that the vendor must provide proof to the Commissioner that the vendor—
(a) has made the taxable supply for a consideration in money;
(b) has furnished a return in respect of the tax period for which the output tax calculated in subparagraph (9) was payable; and
(c) has properly accounted for the output tax on that supply as contemplated in subparagraph (9).

 

(11) Where a written contract provides for a retention amount to be withheld for a period exceeding the five years, proof of payment of that retention amount does not have to be obtained in order to satisfy the proof of payment requirement.

 

(12) In the event that the vendor and the qualifying purchaser are connected persons, the provisions of the Act setting out the rules with regard to connected persons are mutatis mutandis applicable to the supply of movable goods being exported.

 

(13) The rate of tax applicable for purposes of this Part is the rate of tax in force at the date of issue of the tax invoice.