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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.

Export VAT

DIRECT

The supplier delivers goods to the purchaser, and no VAT is added.

INDIRECT

The purchaser arranges for the collection of goods.

Supplier physically delivers goods to the purchaser

Supplier adds 15%, the purchaser claims back VAT

Cartage contractor delivers goods on behalf of the supplier

Supplier supplies at a zero rate. Supplier is held accountable to prove goods left the country.

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.

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 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 a 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.

LAND BORDER POSTS

INTERNATIONAL AIRPORTS

HARBOURS

RAILWAY STATIONS

Zimbabwe:
• Beit Bridge

Bloemfontein

Cape Town

Germiston

Mozambique:
• Lebombo

Cape Town

Durban

Golela

Namibia:
• Vioolsdrift
• Nakop/Narogas

King Shaka (Durban)

East London

Johannesburg

Botswana:
• Ramatlabama
• Skilpadshek
• Groblers Bridge
• Kopfontein

OR Tambo (Johannesburg)

Mossel Bay

Maseru Bridge

Lesotho:
• Caledonspoort
• Ficksburg Bridge
• Maseru Bridge
• Van Rooyenshek
• Qacha’s Nek

Gateway (Polokwane)

Port Elizabeth

Mafikeng

Eswatini:
• Jeppe’s Reef
• Mananga
• Mahamba
• Nerston
• Golela
• Oshoek

Lanseria

Port Ngqura

Upington

Kruger Mpumulanga

Richard’s Bay

Pilansberg

Saldanha

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 blog post Calculating Import Duties & Vat.

Tracy Venter

Tracy transitioned from industry to founding Import Export License in 2011, aiding importers and exporters with customs compliance. In 2014, she launched Trade Logistics, focusing on supporting startups and SMMEs in international trade. Since then, Tracy's team has assisted 35,000+ businesses, reaching 32,000 traders monthly through newsletters. She's contributed to publications like Entrepreneurs Magazine and SME Toolkit, spoken at trade events, and participated in customs forums. Import Export License helped with the pilot trial to launch customs' new online registration platform (RLA). Through Trade Logistics she has launched 3 online import-export training courses. She holds an Honours degree from Stellenbosch University and a Cum Laude Masters from Middlesex University. In her spare time, Tracy enjoys running, mountain biking, playing piano, and cherishing moments with her husband and four children.