Please find attached a letter received by one of my clients from SARS. It was common practice to use CN2s as proof to zero-rate sales invoices for cross border logistics services and exporter. Please advise what taxpayers should use in the meantime
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
Background to the CN2 document The CN2 document is not a document prescribed by the Customs and Excise Act. It is an operational document issued by SARS at points of exit serving as a gate pass. The printing of the CN2 at the Beitbridge border post has been temporarily suspended with effect from 8 November 2020. It may or may not be reinstated once the traffic flow at the relevant border post has been normalised. SARS indicated that exporters may use their CUSRES 42 (the “marked for exit” message) as proof of export if they need a document to acquit and effect payment amongst the supply chain role players. The VAT Act The VAT Act requires that a vendor exporting goods at the zero-rate of VAT must, amongst others, hold the customs documentation and proof of delivery of the goods in the export country. Application of the principles The CN2 is not a document prescribed in the Customs and Excise Act and therefore cannot be a requirement for VAT purposes. While not required as a Customs document, it may be prudent to retain the CUSRES 42 to avoid unnecessary disputes with SARS. For VAT purposes the supplier must have proof of delivery in the export country. This is not a Customs document; it is prescribed by the VAT Act and serves as proof that the goods have left South Africa.