BY Annelie Giles AND Seelan Moonsamy
South Africa: Coronavirus (COVID-19) | VAT relief extension of the prescribed periods for the exportation of goods
In keeping with the promise of government to introduce fiscal measures to address the negative impact of the Coronavirus (COVID-19) pandemic on business, the South African Revenue Service (“SARS”) released Binding General Ruling (VAT) 52 (“BGR 52”), dated 27 March 2020, that extends the prescribed time periods relating to the exportation of movable goods from South Africa.
Currently, for a direct export of goods (ie, where a vendor assumes responsibility for delivery of the goods to the recipient in the export country, either by itself, or by appointing a cartage contractor to deliver the goods on its behalf), the vendor is required to export the movable goods from South Africa within 90 days from the earlier of the time an invoice is issued by the vendor or the time any payment of consideration is received by the vendor (commonly referred to as the general rule for a direct export transaction). There are exceptions to this general rule that apply in specific circumstances eg, precious metals supplied and exported from South Africa via air must be exported within a period of 30 days from the date of the export release as per the “Release Instruction” received from the recipient acquiring the precious metal. A direct export of goods is governed by Interpretation Note 30 (Issue 3) issued by SARS on 5 May 2014.
In instances where a vendor is unable to export movable goods from South Africa within the prescribed time period due to circumstances beyond the vendor’s control, the vendor must apply in writing for a value-added tax (“VAT”) ruling to SARS (before the expiry of the prescribed 90-day period or such other period), requesting that the prescribed period be extended. SARS regards circumstances beyond the vendor’s control to include:
- exceptional commercial delays or difficulties that prevent the vendor from exporting the movable goods within the prescribed time period;
- a natural or human-made disaster;
- a civil disturbance or disruption in services; or
- a serious illness of or an accident concerning the vendor or the person responsible for arranging the export.
In a similar vein, for an indirect export of movable goods (ie, where the vendor ensures that the goods are delivered to a designated commercial port in South Africa from where the goods are to be exported by the qualifying purchaser; or where a vendor supplies the goods to a qualifying purchaser and the goods are to be exported by the qualifying purchaser’s agent via road or rail; etc), the Export Regulations issued on
2 May 2014 (Regulation R. 136 in Government Gazette No. 37580), set out the requirements and the documentary proof for an indirect export of goods. The general rule for an indirect export transaction also states that the movable goods must be exported from South Africa within 90 days from the earlier of the time an invoice is issued by the vendor or the time any payment of consideration is received by the vendor (as in the case of direct exports, there are certain exceptions to this general rule).
The Export Regulations also provide that where the movable goods cannot be exported within the prescribed time period by the vendor due to circumstances beyond the control of the vendor or due to exceptional commercial delays or difficulties, the vendor may approach SARS for a VAT ruling to extend the 90-day time period (before the expiry of the prescribed 90-day period or such other period).
BGR 52 recognises the COVID-19 pandemic as being a circumstance that is beyond the control of the vendor and as a result, the prescribed 90-day period to export the goods from South Africa, for both direct and indirect exportation of goods, is extended by an additional three months (the additional three months also apply in the case of exceptions for a direct export (covered in IN30(3)) and for an indirect export (covered in the Export Regulations).
It is noted that the VAT relief embodied in BGR 52 is only applicable to supplies of movable goods for both direct and indirect export of goods, where the prescribed time periods have not yet been exceeded as at 26 March 2020. Although BGR 52 is silent on the extension of the prescribed time periods to obtain the documentary proof for a vendor who has applied the rate of zero per cent to a direct or an indirect export of goods, it is understood that this is automatically extended by an additional three months (ie, since the current requirement for both direct and indirect exports require that the documentary proof is obtained within 90 days from the date the movable goods are required to be exported from South Africa).
Lastly, in the case where a vendor has levied VAT at the rate of 15% on a supply of goods to a qualifying purchaser, BGR 52 also extends the prescribed time period the qualifying purchaser has to export the goods by an additional 3 months from the date of the tax invoice, and the qualifying purchaser also has an additional three months from the date of the export to apply for a refund of VAT paid from the VAT Refund Administrator.
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COVID-19, also known as the Coronavirus, is an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) that was declared a pandemic by the World Health Organization on 11 March 2020. The disease has since been reported in over 190 countries.
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