import export services for trade agreements

Export VAT: A quick guide

You’ve got the goods, you’ve got the buyer, and you’re ready to export…right after you’ve sorted out your export VAT of course.

If you find the mere mention of “VAT” enough to make your head spin, this quick guide will give you a breakdown of the most important things you need to know about export VAT.

In South Africa, a standard 15% VAT levy is charged on most goods and services (excluding a limited number of zero-rated or 0% VAT goods). Businesses also pay VAT on imported goods. The question is – should VAT be charged on exported goods? This will be discussed below.

Export VAT: Direct vs indirect exports

Before we dive into the difference between direct and indirect exports, it is important to define a few terms:

  • The supplier: The party offering the goods for sale to be exported;
  • The purchaser: The party buying the goods from the supplier.

When exporting goods from the Republic of South Africa (RSA) to any export country, a distinction must be made between direct and indirect exports. Figure 1 depicts a comparison of these two types.

Figure 1: A comparison between direct and indirect exports in relation to export VAT.

*For the cartage contractor to qualify, transport must be his main activity, and he must be registered as a VAT vendor.

Direct exports:

Direct exports occur when a supplier delivers the goods to a client at an address in an export country. The supplier will be in total control of the export, and is responsible for all aspects of the exportation.

In order for the vendor to apply the zero rate to the exported goods, the vendor must:

  1. Export the goods via a designated commercial port (see Table 1 below) within the prescribed time period; and
  2. Acquire and keep the required documentation.

Indirect exports:

Indirect exports occur when the buyer collects, or arranges for the collection and transportation of the goods. In this case, the supplier must add the 15% standard VAT rate to the final price of the goods. The buyer may then claim a refund from the VAT refund administrator.

The supplier can also choose to supply the goods to the purchaser at the zero rate. This can be done when the supplier can prove that the goods were transported to a harbour or airport classified as a “designated commercial port” (Table 1 provides a list of designated South African commercial ports) and were exported to the buyer.

The supplier will be held accountable if the conditions of the export are not met, therefore it is up to the supplier to decide whether to apply the standard VAT rate (15%) or zero rate.

Table 1: Designated South African commercial ports
Land border postsInternational airportsHarboursRailway stations
Zimbabwe:
• Beit Bridge
BloemfonteinCape TownGermiston
Mozambique:
• Lebombo
Cape TownDurbanGolela
Namibia:
• Vioolsdrift
• Nakop/Narogas
King Shaka (Durban)East LondonJohannesburg
Botswana:
• Ramatlabama
• Skilpadshek
• Groblers Bridge
• Kopfontein
OR Tambo (Johannesburg)Mossel BayMaseru Bridge
Lesotho:
• Caledonspoort
• Ficksburg Bridge
• Maseru Bridge
• Van Rooyenshek
• Qacha’s Nek
Gateway (Polokwane)Port ElizabethMafikeng
Eswatini:
• Jeppe’s Reef
• Mananga
• Mahamba
• Nerston
• Golela
• Oshoek
LanseriaPort NgquraUpington
Kruger MpumulangaRichard’s Bay
PilansbergSaldanha
Port Elizabeth
Upington

Whether you choose to charge the standard 15% VAT rate on your products or select the zero-rated option, it’s important to decide and communicate this to the purchaser upfront. Knowing the preferred VAT arrangements in advance will help you to make informed decisions about whether to deliver your goods to the purchaser, or to leave it to them to collect the goods. It will also help avoid any disputes, which will help facilitate a smooth relationship between you and the purchaser.

Want to know more about VAT? To learn more about VAT on imports, read our blogpost Calculating Import Duties & Vat.