List Of Zero Rated Vat Items In South Africa
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VAT is a type of consumption tax. The Government imposes a domestic VAT requirement in most countries. VAT-using countries designate certain goods as zero-rated. Zero-rated items are typically individualized.
Despite the rising cost of living in South Africa, you can buy zero-rated goods to make your grocery budget go further by stretching your money. In this blog we are going to explore List Of Zero Rated Vat Items In South Africa.
Read our guide How Does Vat Increase Affect Businesses in South Africa?
What is Value-added Tax (VAT)?
In South Africa, VAT mainly affects the domestic consumption of goods and services, as well as the importation of goods. The VAT is mainly designed to be paid by end consumers or purchasers. Taxes are levied at two rates, namely the standard rate and the zero rate. VAT is usually charged at a rate of 15%.
South Africa has very few business transactions that are exempt from VAT. All taxable supplies throughout the production and distribution chain are collected by businesses registered with SARS as vendors. VAT does not apply to sales or supplies made by non-vendors.
The 3 Types of VAT
VAT is categorized into three types: standard, zero, and exempt.
A certain number of supplies are exempt from VAT: Those businesses do not have to register for VAT if they only make exempt supplies.
Some essential items, such as food and medical supplies, are subject to zero-rated VAT: A zero-rated supply is subject to 0% VAT.
Most South African goods and services are subject to standard-rated VAT: Standard-rated supplies are subject to a 15% VAT rate.
Understanding VAT exemption
VAT exemption is a method that exempts certain goods and services from VAT altogether. This means that when a company sells a VAT-exempt product or service, it does not charge VAT to the consumer and cannot recover any VAT paid on connected expenses. This does not, however, preclude the business from claiming VAT refunds for other taxable operations.
VAT exemptions are often granted to necessary goods and services that are deemed critical to the well-being of society. While these exemptions assist consumers by lowering the cost of necessary commodities, they also provide issues for businesses because they cannot reclaim VAT paid on inputs connected to the exempt activity.
Zero-rated VAT items
Zero-rated supplies are taxable supplies that are subject to zero percent VAT. In other words, Zero-rated supplies, while not subject to VAT, are still considered to be part of a vendor’s enterprise activities even though they do not generate an output tax for the South African Revenue Service (SARS).
The Government grants zero ratings only to specific transactions that serve higher priority objectives than collecting additional VAT. It is intended to promote exports and increase global competitiveness by giving zero-rated status to transactions involving exports of goods or services.
List Of Zero Rated Vat Items In South Africa (Charged VAT At 0%)
Exports: Any goods or services exported from South Africa to a client in another country are zero-rated. However, exceptions may apply if delivery takes place within South Africa.
Basic foodstuffs: 19 essential food items are zero-rated, including brown bread, maize meal, samp, dried beans, lentils, pilchards, milk powder, rice, vegetables, fruit, vegetable oil, milk, and eggs.
Fuel: Certain fuels subject to the fuel levy, primarily petrol and diesel, are zero-rated.
International transport services: Services related to international transport, like air and sea freight, are zero-rated.
Additional items like illuminating paraffin, educational services, and public road and rail transport are also zero-rated.
Common Misconceptions about zero-rated items
All Food Items Are Zero-Rated
One of the misconceptions is that all food items are zero-rated for VAT. However, some exceptions include many basic food products. Even processed or luxury foods may be exempted from standard VAT rates.
Zero-Rated Means No Tax at All
Some people think that zero-rated products are tax-free at all. Zero-rated items are zeroed, and this implies that no VAT is added at the point of sale. Nevertheless, businesses are still forced to record and declare such transactions for taxation purposes.
Zero-rated VAT Applies to All Medicines
Although some medical supplies and basic healthcare products can be zero-rated, not all medications are. Some prescription drugs and other specialized healthcare materials could still be taxed under the regular VAT rate.
Zero-rated VAT is a Permanent
Some may think that an item zero-rated is permanently so. On the other hand, government policies may change, and some items could be added or removed from the zero-rated list based on economic factors as well as regulatory changes over time.
Zero-Rated VAT Only Benefits Consumers
The advantages of zero-rated VAT are likely limited to consumers only. In fact, even businesses that involve zero-rated goods enjoy benefits like lower costs and higher competitiveness.
FAQs
How do exempt and zero-rated VAT differ?
In general, zero-rated items are goods for which the Government charges VAT but at the current rate of zero. VAT-exempt goods do not incur VAT charges or payments but must still be reported on the VAT return.
Does South Africa charge VAT to doctors?
A medical practitioner’s VAT charge is based on the consumption of their services (the provision of healthcare). Basically, this means that you will need to pay a portion of your revenue to SARS as VAT.
In South Africa, do foreigners have to pay VAT?
Almost all goods and services are subject to Value Added Tax (VAT). It is not exempt for foreign visitors to pay VAT on purchases made in the country. When the total value of the purchased items exceeds R250, they can, however, claim back the VAT paid.
Who has to pay VAT in South Africa?
Businesses with a 12-month revenue of over R1 million must register and pay VAT to SARS. Businesses with a 12-month turnover of less than R1 million but larger than R50,000 may voluntarily register.
How can I claim VAT back when I leave South Africa?
The application for a refund must be submitted to the VAT Refund Administrator’s offices. These offices are located at the Johannesburg, King Shaka, and Cape Town International Airports, as well as other land border stations and designated commercial harbors.
If a seller is eligible for a VAT refund, SARS must pay it within 21 business days of receiving the right VAT return.
Why do South Africans oppose an increase in VAT?
The VAT hike will disproportionately affect low-income persons in the country, with less influence on those earning more than R35 000 per month. People with low incomes will once again subsidize the rest of South Africa.
Bottom Lines
In the conclusion for the blog, “List Of Zero Rated Vat Items In South Africa”, this zero-rated status not only helps consumers save their money but relieves firms in particular industries, too; therefore, it leads to economic prosperity.
Although the Government may, on occasion, update and modify these provisions, one must keep track of any changes that have recently taken place in relation to zero-rated items. Individuals would be able to make informed purchase decisions, and companies could manage compliance if only they were conversant with these VAT-rated items. If you want to check VAT then use our VAT Calculator and get the exact estimates in South Africa.
