VAT on import

[Jennajay]

If we supply services to a company(B) and we need to outsource a part to an international supplier(C) when we add those costs to our billing do we need to charge Company(B) VAT for it?
The company(B) cannot handle the payment directly because you need to belong to a particular association in order to pay them.

[Justloadit]

I assume firstly that you are a VAT registered vendor, and secondly that the foreign outsourced part is a service, but not goods. In other words there is no physical entry of the outsourced part through local customs. Following this route, there would be an input VAT payable when the goods would clear customs.

However if services are provided, there is no manner of input VAT to pay, however it does not detract from the process that you as a VAT vendor, must charge VAT on all goods or services provided to anyone in RSA. There will be an output VAT, but no input VAT to offset the amount of output VAT you are going to pay.

So if you import services for R1000.00, and charge R1,250.00 for the service provided, you must add VAT on the R1,250.00 amount. So the invoice will show services R1,250.00, VAT R 175.00, total invoice R1,425.00. At the end of the VAT month, you will pay to SARS - R175.00 of VAT. Your client will now be able to claim the R175.00 of input VAT, if they sell the services on to another client.