Who is liable for the payment of vat?
VAT is levied on all supplies made by registered vendors in the course or furtherance of their enterprises. Only a registered vendor may levy VAT. A vendor making exempt supplies or who is not registered may therefore not charge VAT and may not claim back any VAT borne by the enterprise. A vendor that makes taxable supplies of more than R150 000 per annum must register for VAT. If a vendor makes taxable supplies of less than R150 000 per annum he she is not obliged to register as a VAT vendor but may nevertheless apply for voluntary registration.
When a registered vendor is supplied with goods or services by another registered vendor the supplier of those goods or services will levy VAT. A vendor subtracts his her input tax (VAT borne by him her on the acquisition of goods and services) from his her output tax (the VAT charged by him her on the supply of goods and services). The difference is VAT payable to the Receiver of Revenue. The effect of this is that VAT is borne by the end consumer of goods and services.
Items subject to the zero-rate
The following goods and services are subject to VAT at the zero rate
Goods exported from South Africa
Brown wheaten meal
Fruit and vegetables
Pilchards and sardinella in tins or cans
Milk cultured milk and milk powder
Edible legumes and pulse or leguminous plants
Dairy powder blends
Petrol and diesel
Certain supplies made for farming agricultural or pastoral purposes provided that certain requirements are met
Certain gold coins issued by the S A Reserve Bank (including the Kruger Rand)
State subsidies and donations to welfare organisations
Transfer payments made by public authorities to vendors
Services supplied outside South Africa.
A zero-rating implies that VAT at zero percent ( ) Is levied on supplies and all VAT borne by the vendor for purposes of making such supplies is claimable as an input tax deduction.
The following goods and services are exempt from VAT
Passenger transport by road and rail
The rental of residential accommodation
Educational services in creches nursery schools primary and secondary schools after-school centres universities and technikons
Interest pension and life insurance benefits
Medical services and medicines supplied by State and provincial hospitals and local authority clinics
The supply of any goods or services by an employee organisation to its members to the extent that the consideration consists of membership contributions.
An exemption implies that the supplier of services bears VAT on its purchases but does not levy VAT on its supplies.
Tourists diplomats and exports to foreign countries
VAT borne by foreign tourists may be refunded by the VAT Refund Administrator (VRA) upon departure from South Africa. The tourist must be in possession of a tax invoice and have the goods available for inspection upon departure from the RSA. A small commission is levied by the VRA for processing the refund.
Tax relief is granted to certain diplomatic and consular missions in the form of a refund of VAT borne on official purchases. Where a vendor supplies movable goods and consigns or delivers the goods to a recipient in an export country he she may apply the zero rate.
If a non-resident or a foreign enterprise purchases goods in South Africa and subsequently exports the goods the VAT may be refunded by the VAT Refund Administrator. In certain circumstances the vendor may apply the zero rate where the goods are exported by rail sea or air provided the vendor obtains proof of export as required under the Export Incentive Scheme.