25. SARS VAT Vendors Guide.pdf

Example 33 other supplies abc pty ltd sells movable

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Example 33 – Other supplies ABC (Pty) Ltd sells movable goods to a qualifying purchaser on a free on board (FOB) basis (XYZ Merchants Ltd) situated in China. The movable goods have already received the necessary customs clearance and are ready for export as the goods were delivered on board the named vessel at the Durban harbour. ABC (Pty) Ltd elected to levy VAT at the zero-rate on the sale of the movable goods on the basis that it delivered the goods to the Durban harbour (being a designated harbour). Due to financial difficulties the business of XYZ Merchants can no longer purchase the movable goods from ABC (Pty) Ltd. ABC (Pty) Ltd then sells the movable goods to a local vendor, MW (Pty) Ltd instead who on-sells the movable goods to a qualifying purchaser, AB Ltd, situated in Italy. In this instance, ABC (Pty) Ltd may still levy VAT at the zero-rate on the sale to MW (Pty) Ltd because the movable goods are destined for export to the new qualifying purchaser that is AB Ltd as well as the fact that the goods are situated at a designated harbour and it has been delivered to either the port authority or master of the ship. Part Two – Section B Indirect exports by road or rail were not accommodated under the previous VAT Export Incentive Scheme. Part Two Section B of the Export Regulations provide for a supplier to elect to supply movable goods to a qualifying purchaser at the zero-rate where the goods are exported by road or rail subject to specific requirements that must be met by the relevant parties. After collection, the goods are stored and consolidated by the agent in a warehouse until the consolidated consignment of goods is exported to the qualifying purchaser in the export country. 129 In such a case, the various suppliers may elect to zero-rate the supply of such goods provided, amongst others, that the qualifying purchaser is registered as an “exporter” under the Customs and Excise Act. The agent and the cartage contractor who are responsible for removing the goods, either inland or to the export country, must be licensed as removers of goods in bond as contemplated in the Customs and Excise Act. In order to apply the zero-rate in respect of the supply of movable goods, the supplier and the agent must obtain and retain sufficient documentary proof as contemplated in Part Two – Section B of the Export Regulations . Lastly, this Part makes provision for the supply of certain lubricating oils and greases to be zero-rated by the manufacturers thereof in the oil and gas industry where such goods are exported by road or rail by the qualifying purchaser or its cartage contractor. For the zero- 129 The goods must be exported within 90 days as contemplated in Part Three. 101
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VAT 404 – Guide for Vendors Chapter 12 rate to apply to such a supply, the relevant documentary requirements must be met as set out in this Part.
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