Zero rated VAT items – Know them well and get it right with SARS.
The definition of Zero Rated items are supplies of goods or services specified in the Vat Act that can be billed at 0% VAT. This means no additional amount of VAT will be added to the purchase price of zero-rated supplies and services.
The VAT Act, specifies sixteen Zero Rated VAT items and it’s important to know so you can get it right with SARS, and avoid penalties or difficult questions if you get audited.Obviously, a great bookkeeper and accountant will know these well and keep you out of trouble.
Herewith the 16 Zero Rated VAT items allowable by the VAT Act.
- Direct exports;
- Disposing of an enterprise or part of it as a going concern;
- Certain specified foodstuffs;
- Petrol or distillate fuel oil subject to fuel levy;
- The supply of illuminating kerosene (paraffin);
- The supply of certain goods for farming purposes;
- The sale of gold to the South African Reserve Bank, South African Mint and other registered banks;
- The supply of gold coins by the South African Mint, but not gold coins set into jewellery;
- The supply of goods to a branch or main business in an export country;
- Supplies to the Industrial Development Zones (where the direct export rules apply);
- Conversion of old order mineral rights;
- Income of foreign donor-funded projects;
- Supply of goods by a vendor to a non-resident where that vendor delivers the goods in South Africa;
- Compensation received from a public authority in terms of Section 19 of the Animal Diseases Act, 1984 to supply a ‘controlled animal or thing’ as defined in that Act to a public authority;
- Land reform and land restitution transactions; and
- Goods sold from a duty-free shop.
Its a good idea to share this article with your bookkeeper and accountant if your business frequently has transactions with zero rated VAT items. This is another step towards accounting excellence – completeness, accuracy, and validity.
