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Thread: VAT treatment of transportation of goods across border

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    VAT treatment of transportation of goods across border

    Hi everyone,

    I have a few questions regarding VAT and cross border transport.

    Company A (VAT registered) - Provides transport services of goods within SA.
    Company B (VAT registered) - Provides the goods and use Company A for transportation of the goods.

    Normally the goods are transported by Company A within the borders of SA and Company A bills Company B for the transport and issues a tax invoice to Company B at 14%.

    E.g.
    TAX INVOICE ISSUED TO COMPANY B
    Transport of goods: R100.00
    VAT at 14%: R14.00
    Total: R114.00


    In exceptional circumstances, Company B wants a certain amount of goods transported across border.
    Company A is unable to transport that amount of goods and use a subcontractor, Company C, to transport the goods across border to a SA registered company.

    Company C bills Company A and issues Company A with a tax invoice at 14%.

    E.g.
    TAX INVOICE ISSUED TO COMPANY A
    Transport of goods: R200.00
    VAT at 14%: R28.00
    Total: R228.00


    Company A then bills Company B

    TAX INVOICE ISSUED TO COMPANY B
    Invoice received from subcontractor: R228.00
    VAT at 14%: R31.92
    Total: R259.92


    Is the VAT treatment correct by Company A and Company C?

    Does the VAT treatment change if the receiver of the goods across border is a Foreign registered company?


    Regards
    Trevor

  2. #2
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    After reading Section 11 of the VAT Act and Interpretation note no. 30, I've come to the following conclusion:

    It is necessary for the supplying vendor to be in a position to substantiate the application of the zero rate.

    If the Commissioner is not satisfied that there is adequate proof to substantiate the application of the zero rate, the supply is deemed to include VAT at the standard rate.

  3. #3
    Email problem Mike Simmonds's Avatar
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    Company A then bills Company B

    TAX INVOICE ISSUED TO COMPANY B
    Invoice received from subcontractor: R228.00
    VAT at 14%: R31.92
    Total: R259.92


    This is not correct as you are charging VAT on VAT! Remember that the invoice you receive from a supplier is INPUT VAT and what you charge out is OUTPUT VAT. VAT = Value Added Tax. If there is no value added i.e. markup then the amount of the invoice will remain unchanged.

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    Email problem Mike Simmonds's Avatar
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    Quote Originally Posted by trevorp View Post

    Does the VAT treatment change if the receiver of the goods across border is a Foreign registered company?

    Yes it does, but I suggest you read: http://www.sars.gov.za/AllDocs/Legal...20Services.pdf

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