Living in Legoland: The Case for Structured VAT Export Compliance

Living in Legoland: The Case for Structured VAT Export Compliance

• 29 May 2025
• VAT
• Christo Theron

Accountants are often accused of living in Legoland—where everything must fit perfectly into neat little boxes, or else…

When it comes to VAT compliance for export requirements, living in Legoland is not just a preference, it's a necessity. It entails understanding the regulatory environment, ensuring the correct documentation, and then ticking all the boxes.

This article explores how a structured, rule-based approach ("Legoland") can be harmonised with the often fluid and unpredictable world of international trade.

Why Spend Time in Legoland?

Complying with VAT requirements for the export of goods often creates uncertainty, particularly due to the complexities of international trade.

Not all exporters have access to sophisticated systems and information to guarantee compliance. Most businesses are primarily focused on trading, and tax considerations tend to take a back seat.

However, in the context of exports, the cost of non-compliance can be significant—sometimes even devastating to the business. Because the requirements are specific and best approached systematically, operating in Legoland is essential to safeguard the business in this key area.

Where Does It All Start?

Policies: A Necessary Foundation

Policies are often viewed as barriers to doing business freely—but they don’t have to be.

A clear policy on the VAT treatment of exports is essential. While direct exports must be zero-rated, indirect exports may only be zero-rated under certain conditions.

Exporters are frequently pressured by clients to zero-rate indirect exports in order to win or retain business. This pressure is often a red flag that the export may not qualify for zero-rating. A clear, organisation-wide policy on when indirect exports may be zero-rated equips the sales team to engage with clients confidently and appropriately.

While this might create short-term friction, it will yield long-term benefits for the business.

Other Necessary Policies

In addition to export-specific policies, the following should also be clearly defined:

• How VAT returns are submitted
• The review and approval process
• Who is authorised to interact with SARS
• When external consulting may be sought

The scope and formality of these policies will vary depending on the nature of the business. There is no one-size-fits-all solution.

How to Enforce the Policy

A policy without a supporting procedure is ineffective. Every policy should be backed by clear procedures to ensure consistent and reliable execution.

While few people enjoy being bound by procedures, the consequences of non-compliance—such as financial penalties or reputational harm—are strong motivators for revisiting a structured, rules-based approach.

And if your policy stipulates that losses due to non-compliance will be deducted from sales bonuses, you might just find greater cooperation from the sales team.

Conclusion

Few enjoy operating in Legoland—but in the field of VAT export compliance, it’s one place where structure is non-negotiable. Businesses must embrace this rules-based approach… or risk the consequences.

Learn why structured policies are essential for VAT export compliance in a complex trade environment – register now to secure your spot.

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