7 Supporting docs you must have to substantiate your zero-rated VAT claims
There‘s a pile of important documents SARS needs as proof if you want to substantiate your supply of zero-rated goods and services. If you get one document wrong (by not attaching it to your pile of documentary proof), SARS will have you pay VAT on supplies you zero-rated.
Be warned: This will affect your cash flow negatively.
To make zero rating even more complicated, SARS recently updated Interpretation Note No 31. If you haven’t got the hang of it yet let me help demystify this Interpretation Note for you.
Let’s have a look at some of the highlights below.
What does the Interpretation Note No 31 mean?
In a nutshell, it stipulates what documentary proof is required, when you zero rate supplies of goods or services (Section 11 (1), (2) & (3)).
What docs do you need?
Some of the requirements include:
On goods supplied to a foreign-going ship:
- Proof of export on which the aircraft’s pilot, ship’s captain or a responsible person appointed by the pilot or captain, signed acknowledgement that he/she received the goods.
- Proof of payment
Goods that form part of a repair service temporarily admitted into South Africa from an export country:
- The original, relevant Customs forms; and
- Proof of payment.
With goods used exclusively in an export country or in a customs-controlled area (CCA) of an industrial development zone (IDZ), additional requirements can include:
- Proof of payment; and
- In the case of use in an export country, proof of export or proof the movable goods are situated outside the Republic at the time of supply; or
- The relevant Customs documents
There are also some important additions in the case of zero-rated services you supply. Study Interpretation Note 31 (Second Issue) and let me train your staff on it.
I don’t want you to have to pay VAT, interest and possible penalties on legitimate zero-rated supplies just because you don’t have one or two of the required documents.