Covid19 – VAT relief for exporters and certain imports
Covid19 – VAT relief for exporters/certain imports
The treatment of indirect exports is guided by the regulation published in GN No. R. 316 Government Gazette No. 37580 (‘the Export Regulations’). Similarly, direct exports are guided by the application of Interpretation Note No. 30 (Issue 3) (‘IN 30’).
IN30
In terms of IN 30, at a high level, in order for the supply of a direct export to be supplied at the zero rate of VAT the moveable good is required to be exported within ninety days from the earlier of the issuance of an invoice or the receipt of any payment of consideration. Accordingly, supporting documentation is required to be obtained within ninety days of the date that the moveable good is required to have been exported.
The Export Regulations
In terms of the Export Regulations, at a high level, for an indirect export, the movable good is required to be exported by the qualifying purchaser within ninety days from the date of the tax invoice or where the moveable good is delivered via road or rail, a pipeline or electrical transmission or the moveable good is first to be delivered to a commercial port, the moveable good is required to be exported within 90 days from the earlier of invoice date or the date that any payment for the consideration has been received. For indirect exports, supporting documentation is required to be obtained within ninety days from the required date of exportation.
The current Corona virus crisis can result in exporters not adhering to the 90-day time frame resulting in them having to bear the costs of a 15% VAT liability in respect of the goods sold. This could have severe financial implications for exporters.
In light of the above, SARS has issued Binding General Ruling 52 (‘BGR 52’) on the 26th of March 2020 to extend the timeframe for an indirect or direct export to be exported from South Africa and for a qualifying purchaser to apply for a refund from the VAT Refund Administrator.
IN 30 and the Export Regulations make provision for the instance where an extension to the timeframe within which the moveable good is required to be exported is allowed as a result of “circumstances beyond the control of the qualifying purchaser or the vendor”. Such circumstances may be where there was a natural or human-made disaster or the vendor, qualifying purchaser, the person representing the qualifying purchaser, or the person responsible for the exportation had a serious illness. The Coronavirus and South African lockdown will make it extremely difficult for the above persons to be able to export moveable goods within the prescribed timeframe due to circumstances beyond the control of the responsible person. Accordingly, where the original timeframe for the exportation of the movable good has not yet been exceeded at 26 March 2020, BGR 52, provides that the timeframe for a direct and indirect export to be exported is extended by three months. As the date by which the moveable good is required to be exported has been extended this will result in the date by which the supporting documentation is required to be obtained also being extended by three months.
Where a qualifying purchaser has exported moveable goods in terms of an indirect export, met all stipulated requirements and is entitled to a refund of VAT from the VAT Refund Administrator, the timeframe for application of the refund has been extended by six months.
BGR 52 will remain in force until such time as it is withdrawn, amended or the relevant legislation has been amended.
SARS has also provided relief in the form of an exemption on the VAT on importation of “essential goods” during the coronavirus pandemic. “Essential goods” are defined in Annexure B (as amended) of R.398 in Government Gazette No. 43148 issued on the 25th of March 2020. “Essential goods” include items such as food products, animal food, toilet paper, hand sanitiser, household cleaning products, medical and hospital supplies, fuel, airtime and electricity.
References
- https://www.sars.gov.za/Media/Pages/CoronaVirus.aspx
- https://www.sars.gov.za/AllDocs/LegalDoclib/Rulings/LAPD-IntR-R-BGR-2020-10%20-%20BGR52%20Timeframe%20for%20the%20export%20of%20goods%20by%20vendors%20and%20qualifying%20purchasers%20affected%20by%20COVID%2019.pdf
- https://www.sars.gov.za/AllDocs/LegalDoclib/Notes/LAPD-IntR-IN-2012-30%20-%20Documentary%20Proof%20Movable%20Goods%20Consignment%20Address%20%20Export%20Country.pdf
- https://www.sars.gov.za/AllDocs/LegalDoclib/SecLegis/LAPD-LSec-Reg-2014-05%20-%20Regulation%20R316%20GG%2037580%202%20May%202014.pdf
- Government Gazette No. 43148