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[FAQ] VAT on the export of second-hand goods
- 07 May 2021
- VAT
- The Tax Faculty Tax Specialist
This article is based on tax law for the year ending 28 February 2021.
Question
Can second-hand goods be exported at zero-rate of VAT?
Answer
The VAT Act
Section 11(1)(a) of the VAT Act zero-rates the export of goods supplied in terms of a sale or instalment credit agreement, if the goods are exported as envisaged in, amongst others, paragraphs (a) of (d) of the definition of “exported” in section 1(1) of the VAT Act.
Paragraph (a) of the definition of “exported” in section 1(1) of the VAT Act defines as an export moveable goods consigned or delivered by the vendor to the recipient at an address in an export country (generally referred to as direct exports).
Paragraph (d) of the definition of “exported” in section 1(1) of the VAT Act defines as an export moveable goods removed from South Africa by the recipient or the recipient’s agent for conveyance to an export country in accordance with any regulation made by the Minister of Finance in terms of the VAT Act (generally referred to as indirect exports).
The proviso to section 11(1) of the VAT Act determined that exports of goods in terms of, amongst others, section 11(1)(a) of the VAT Act, cannot be zero-rated if the goods being exported consist of second-hand goods on which a notional input tax deduction has been made in terms of paragraph (b) of the definition of “input tax” in section 1(1) of the VAT Act by the vendor or any connected person in relation to the VAT vendor.
Application of the principles
Second-hand goods may be exported at the zero-rate of VAT on the condition that neither the exporting vendor nor any connected person in relation to the vendor has claimed a notional input tax deduction in relation to the second-hand goods being exported.
Webinar Commentary
Refer to webinar commentary Monthly Tax Update - April 2021 here.