EXSA NEWS

EXSA VAT ruling — a huge benefit to members

EXSA’s SARS VAT ruling is an irreplaceable benefit exclusive to EXSA members only. If used properly it will ensure that you are able to give your organisation a big competitive advantage when dealing with clients’ budgets. It will greatly benefit your clients, saving them from the rigmarole of having to navigate a non-familiar tax system to claim the VAT back via a tedious process from wherever they may be in the world.

By Liam Beattie, board member of EXSA and Justin Hawes, managing director of Scan Display and EXSA member.

On 4 February 2022, EXSA hosted a webinar highlighting the main factors of the VAT ruling. Justin Hawes, managing director of Scan Display and EXSA member, presented these points.

Here is a summary of his presentation

Every 12 months EXSA supplies SARS with a list of members that qualify for the VAT ruling in accordance with their membership status. This will allow those members to zero-rate goods and services supplies to non-South African residents.

Mr Hawes’ presentation explained the act as follows:

Section 11 – Zero-Rating (splitting into goods and services):

Goods (what does the act say?) (1) Where, but for this section, a supply of goods would be charged with tax at the rate referred to in section 7 (1), such supply of goods shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero percent where…

(d) the goods (being movable goods) are supplied to a lessee or other person under a rental agreement, charter party or agreement for chartering, if those goods are used by that lessee or other person exclusively in any commercial, financial, industrial, mining, farming, fishing or professional concern conducted in an export country and payment of rent or other consideration under the agreement is effected from such export country; or

- Movable goods.

- Rental agreement.

- Goods used by that lessee.

- Concern conducted in an export country (enterprise).

- Payment of rent or other consideration under the agreement is effected from such export company — it may be Rands.

Services

1.5.1 The following services supplied by EXSA members to a non-resident exhibitor may be zero-rated insofar as the requirements of section 11 (2) (l) are met:

- Arranging for the rental of the exhibition space.

- Arranging for the rental of goods, décor, fixtures and fittings.

- Designing the layout of the exhibition site.

- Erecting the stalls.

- Dressing and setting up the stall.

The supply of movable goods directly from the act:

4.8 Although movable goods supplied under a rental agreement qualify for zero-rating under section 11 (1) (d), this provision has a narrow application. It is conditional on the rented movable goods –

4.8.1 Firstly, being used for purposes of the foreign enterprise’s (that is, the foreign exhibitor’s) commercial enterprise.

4.8.2 Secondly, the foreign enterprise should be conducted exclusively offshore.

4.8.3 Thirdly, payment of the rental should originate offshore from the country where the foreign enterprise trades.

4.8.4 Finally, documentary proof should be obtained and retained in accordance with Section 11 (3) — see below and read with paragraph F, also below, of table A in IN31.

Section 11 (3) – Documentary proof to substantiate a vendor applying the zero-rate

Where a rate of zero percent has been applied by any vendor under a provision of this section, the vendor shall obtain and retain such documentary proof substantiating the vendor’s entitlement to apply the said rate under that provision as is acceptable to the commissioner.

Paragraph F:

Description of supply: Movable goods used exclusively in a business conducted in an export country [section 11 (1) (e)]

Documentary proof required:

a) Tax invoice; and

b) Proof of payment, which must also evidence that the rent or other consideration was affected from the export country where the business operates or trades.

EXSA has the following responsibility to SARS to uphold the benefit.

5.4 This class ruling is conditional upon the following:

EXSA members must obtain and retain the documents as required by section 11(3) read with IN31 when the zero-rate is applied.

5.4.2 EXSA providing Legal Advisory with a list of all 74 EXSA members (refer to Annexure C of the Ruling) together with the VAT numbers of the EXSA members who are registered for VAT. Should the names and the VAT registration numbers of the members change, EXSA must provide SARS with an updated list every 12 months from the date of the said change.

Liam Beattie, from Hott 3D and board member of EXSA, is someone who makes extensive use of this competitive advantage. He said that if you do projects in excess of R60,000 a year for offshore clients in South Africa, the 15 per cent VAT exemption to these clients literally covers your EXSA membership fee. It also gives a 15 per cent budgetary advantage when pitching projects to these clients.

If you would like any further information on the VAT ruling benefit or enquiries around EXSA membership, please do not hesitate to contact the office at info@exsa.co.za. We will be releasing our list of participants for the 2022 year in March, so please do not delay or you will lose out on this great opportunity.