Results 1 to 5 of 5

Thread: Buying from a supplier who is NOT VAT Registered - which Tax Code?

  1. #1
    Bronze Member michellepace's Avatar
    Join Date
    Oct 2018
    Location
    South Africa
    Posts
    131
    Thanks
    15
    Thanked 3 Times in 3 Posts

    Question Buying from a supplier who is NOT VAT Registered - which Tax Code?

    Hi there.

    QUESTION 1: If I'm buying from a supplier who is not VAT registered. If I am thinking about my Tax Report at the end of the month, which of the below Tax Codes is "the most correct" to use when making a PO?
    • Tax Type 0
    • Zero Rated (0%)
    • Exempt Rated (0%)
    • Standard Rated (15%) ..obviously not


    QUESTION 2: Is there ever a time I should use Type 0?


    Zero-Rated VAT in South Africa
    - 19 basic food items, like milk and brown bread
    - Petrol and diesel
    - Paraffin
    - Certain government grants
    - Sale of a going concern (property or business that is still trading)
    - Export of goods
    - International transport of goods and passengers (Interestingly, this includes the cost of trucking goods from JNB to DUR if they are say enroute to Germany)
    - Certain services supplied to non-residents
    - Services physically rendered outside South Africa

    VAT Exempt Items in South Africa
    - Residential rental accommodation
    - Public road and rail transport
    - Educational services provided by an approved educational institute
    - Non-fee related financial services, like interest
    Thanks again
    Michelle

  2. #2
    Full Member
    Join Date
    Jul 2019
    Location
    Pretoria
    Posts
    71
    Thanks
    8
    Thanked 9 Times in 9 Posts
    HI Michelle.

    Question 1:
    You must use Tax Type 0 for Non-VAT registered suppliers. Zero rated and Exempt VAT is actually VAT according to the VAT Act. It is merely VAT at 0% or an item that is not deemed a VATable supply. So both actually only apply to supplier that are VAT registered.

    Question 2:
    I hope my answer above has answered this one. But just to clarify, you use it if you purchase from non-VAT registered suppliers or if you are invoicing to customers and you are not VAT registered.

    Kindest regards,
    Alec Candiotes CA (SA), MCom Taxation
    Last edited by Dave A; 27-Jul-19 at 05:48 PM.
    Alec Candiotes (CA) SA
    Business Intelligence and Report Automation developer

    www.mybi.co.zaalec@mybi.co.za • 072 997 9553

  3. Thanks given for this post:

    michellepace (30-Jul-19)

  4. #3
    Bronze Member michellepace's Avatar
    Join Date
    Oct 2018
    Location
    South Africa
    Posts
    131
    Thanks
    15
    Thanked 3 Times in 3 Posts
    Super thanks Alec, that's perfectly clear.

    One last question if you wouldn't mind: is a payment to a Pension Fund and Medical Aids zero rated, 00, or Exempt?

  5. #4
    Gold Member
    Join Date
    Feb 2016
    Location
    Johannesburg
    Posts
    713
    Thanks
    74
    Thanked 199 Times in 178 Posts
    They are exempt Michelle

  6. #5
    Full Member
    Join Date
    Jul 2019
    Location
    Pretoria
    Posts
    71
    Thanks
    8
    Thanked 9 Times in 9 Posts
    It is a pleasure Michelle. I agree with Andromeda that it is exempt. But always confirm this by reviewing the invoice from the supplier. It will reflect how VAT was treated.

    For instance if you look at a bank statement you will note a * next to cost that VAT has been raised on (for instance bank charges). Interest again will not have the * next to it as it is an exempt supply.

    So my suggestion is to always look at the suppliers invoice to confirm VAT treatment.

    Hope this helps.

    Alec Candiotes CA (SA), MCom Taxation
    Alec Candiotes (CA) SA
    Business Intelligence and Report Automation developer

    www.mybi.co.zaalec@mybi.co.za • 072 997 9553

Similar Threads

  1. Blank Code and Group code does not exist
    By Helizel in forum Accounting Forum
    Replies: 3
    Last Post: 19-Jun-20, 10:56 PM
  2. Total money paid to each supplier (per month per supplier)
    By michellepace in forum Accounting Forum
    Replies: 6
    Last Post: 14-Jan-19, 02:44 PM
  3. [Question] Supplier Inventory Code on Purchase order
    By gov in forum Accounting Forum
    Replies: 3
    Last Post: 16-Jan-18, 03:36 PM
  4. Replies: 3
    Last Post: 09-Jan-15, 08:33 AM
  5. How does Pastel link a Supplier Return to a Supplier Invoice?
    By Leigh Peiser in forum Accounting Forum
    Replies: 0
    Last Post: 27-May-14, 02:03 PM

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •