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[185.30.177.234]) by smtp.gmail.com with ESMTPSA id r22-20020a17090638d600b006d584aaa9c9sm595182ejd.133.2022.03.31.22.24.13 for (version=TLS1_2 cipher=ECDHE-RSA-AES128-GCM-SHA256 bits=128/128); Thu, 31 Mar 2022 22:24:13 -0700 (PDT) From: michael.sales@charnaud.co.za To: =?UTF-8?B?cmljYXJkbw==?= Subject: =?UTF-8?B?RndkOiBaRVJPLVJBVEVEIElORElSRUNUIEVYUE9SVFMgLSBXSEVOIFNIT1VM?= =?UTF-8?B?RCBJPw==?= MIME-Version: 1.0 X-Mailer: My.com Mailer 1.0 X-SenderField-FwdMsg: 16487039010000013439 Date: Fri, 01 Apr 2022 08:19:24 +0300 X-Letter-Fingerprint: nEanJPTLqfCRDFyQUSHzyxrunOpYqQGC X-Priority: 3 (Normal) X-Mailru-Compose-Stats: =?UTF-8?B?eyJVc2VyU2Vzc2lvblRpbWUiOjY3MDQyNDQsImlzX2luX2FiIjoiMSIsIkhv?= =?UTF-8?B?c3QiOiJlLWFqLm15LmNvbSIsImFiX3NpemUiOjQwfQ==?= Reply-To: michael.sales@charnaud.co.za Message-ID: <1648790364.305684117@f34.my.com> Content-Type: multipart/alternative; boundary="--ALT--wO4hGGuU7jKNeHJBQrUQ6qbUvuEepITq1648790364" X-Spam-Status: No, score=1.3 X-Spam-Score: 13 X-Spam-Bar: + X-Ham-Report: Spam detection software, running on the system "whost03.whost.co.mz", has NOT identified this incoming email as spam. The original message has been attached to this so you can view it or label similar future email. If you have any questions, see root\@localhost for details. Content preview: Bom dia Mfo Please see email below and let me know when you are available to talk. I want to elaborate on the email. Regards Michael Nkuna -- Sent from Outlook Email App for Android -------- Forwarded [...] Content analysis details: (1.3 points, 5.0 required) pts rule name description ---- ---------------------- -------------------------------------------------- 0.5 SUBJ_ALL_CAPS Subject is all capitals 0.0 HTML_MESSAGE BODY: HTML included in message -0.1 DKIM_VALID Message has at least one valid DKIM or DK signature 0.1 DKIM_SIGNED Message has a DKIM or DK signature, not necessarily valid 0.8 CPANEL_LOTS_OF_EMPTY_LINE RAW: Spam that has large block of empty lines -0.0 T_SCC_BODY_TEXT_LINE No description available. 0.0 KAM_SHORT Use of a URL Shortener for very short URL X-Spam-Flag: NO ----ALT--wO4hGGuU7jKNeHJBQrUQ6qbUvuEepITq1648790364 Content-Type: text/plain; charset="UTF-8" Content-Transfer-Encoding: quoted-printable Bom dia Mfo=20 Please see email below and let me know when you are available to talk.=20 I want to elaborate on the email.=20 Regards=20 Michael Nkuna=20 -- Sent from Outlook Email App for Android -------- Forwarded Message -------- From: gary.cfo@charnaud.co.za To: dries.sales@charnaud.co.za , Maritza Harmse maritza.jhbsales@charnaud= .co.za , Michael Nkuna michael.sales@charnaud.co.za Cc: Sohiba Haffeze sohiba.cost@charnaud.co.za , Fahmida Lotan fahmida.exp= ort@charnaud.co.za Date: Thursday, 31 March 2022, 07:18am +02:00 Subject: ZERO-RATED INDIRECT EXPORTS - WHEN SHOULD I? >https://tuffiassandberg.co.za/zero-rated-indirect-exports-when-should-i/ >=C2=A0 >FEBRUARY 5, 2021 >Tax >South African suppliers are often requested (more often bullied) to apply = the zero-rate of VAT to supplies made to non-residents where the non-reside= nt purchaser takes possession of the goods in South Africa. >This article deals with the circumstances under which a South African supp= lier may supply goods at the zero-rate of VAT to non-residents and touches = on the pitfalls and risks assumed by the South African supplier. >=C2=A0 >Introduction=20 >Today business is tough and margins under pressure. This means that custom= ers often hold most of the negotiation cards in their hands. A supplier bas= ically has to do what it has to do to clinch a deal. This is why suppliers = are often coerced into supplying goods at the zero-rate of VAT because =E2= =80=9Cthe other supplier around the corner applies the zero-rate=E2=80=9D.= =C2=A0=20 >=C2=A0 >Does the above sound familiar? Then read on =E2=80=A6 >=C2=A0 >Direct versus indirect exports=20 >The distinction between direct and indirect export is critical as direct e= xport must be supplied at the zero rate of VAT while in the case of indirec= t exports the supplier has the option to apply the zero rate under certain = circumstances. >=C2=A0 >Direct export occurs where the supplier either physically delivers the goo= ds outside South Africa or arranges for the goods to be delivered outside S= outh Africa by the supplier=E2=80=99s cartage contractor. Supplies falling = into this category must be supplied at the zero rate of VAT. The supplier h= as no option to standard rate the supplies.=20 >=C2=A0 >Nice and straight forward. No uncertainty here. But then come indirect exp= orts =E2=80=A6 >=C2=A0 >Indirect exports occur where ownership and possession of the goods pass in= South Africa and the purchaser removes the goods from South Africa. Indire= ct exports may be made at the zero rate of VAT under certain circumstances. >=C2=A0 >When may an indirect export be zero-rated? >As a point of departure an indirect export may only be zero-rated if the s= upply is made to a specific category of person referred as =E2=80=9Cqualify= ing purchasers=E2=80=9D. The most common categories of qualifying purchaser= s are foreign enterprises, persons who are not residents of South Africa an= d foreign tourists.=20 >=C2=A0 >If you can tick the box that the supply is made to a qualifying purchaser,= the next box that needs to be ticked is the manner in which the goods will= be exported, i.e. by sea or air, or by road or rail. >=C2=A0 >Exports by sea or air >Terms and conditions apply =E2=80=A6=20 >=C2=A0 >The qualifying purchaser may take possession of the goods at the South Afr= ican supplier=E2=80=99s premises or factory.=20 >=C2=A0 >The qualifying purchaser must provide the South African supplier with proo= f that the goods have been placed under Customs Control at the relevant air= port or harbour and must provide the South African supplier with all export= documentation. >=C2=A0 >A common example of indirect exports falling into this category is goods s= upplied on a Free on Board (South African Harbour or Airport) (FOB) basis. >=C2=A0 >If the goods are exported by sea or air, the qualifying purchaser that exp= orts the goods needs not be registered as an exporter with Customs and Exci= se in South Africa.=20 >=C2=A0 >Exports by road and rail >This is an area where export mischief (technically referred to as round tr= ipping) is most likely to occur. No wonder that various special rules apply= before goods may be supplied at the zero-rate of VAT where indirect export= s are done by road or rail. >=C2=A0 >Essentially goods can only be exported by road or rail at the zero rate of= VAT if the qualifying purchaser appoints a South African agent that takes = possession of the goods in South Africa and exports the goods from South Af= rica. The agent must be registered with Customs and Excise as a transporter= of goods in bond. >=C2=A0 >Furthermore, the qualifying purchaser must be registered in South Africa a= s an exporter with Customs and Excise before the goods may be supplied to t= he qualifying purchaser at the zero rate of VAT. >=C2=A0 >And it does not end there =E2=80=A6 >=C2=A0 >Very strict and detailed documentary retention requirements are contained = in the Regulation governing indirect exports. In practice this effectively = limits the circumstances under which a supplier would opt to apply the zero= rate of VAT to supplies made where formal business relationships and arran= gements exist.=20 >=C2=A0 >The downside to zero-rating indirect exports >The potential downside is very real and potentially economically devastati= ng.=20 >=C2=A0 >If the relevant documentation is not received within a prescribed period, = the supply is deemed to have been made at the standard rate of VAT and the = supplier must pay the VAT to SARS. As the supplier has already lost control= of the goods, it is unlikely in practice that the supplier would be in a p= osition to recover the VAT from the qualifying purchaser. >=C2=A0 >In short, the supplier=E2=80=99s margin has just been eroded by the VAT pa= yable to SARS! >=C2=A0 >When should indirect exports be zero-rated in practice? >In an ideal world indirect exports should only be made where an existing b= usiness relationship exists and where the supplier has been indemnified aga= inst potential VAT that may become payable in the future. >=C2=A0 >What if the supplier applies the standard rate of VAT? >Where the supplier supplies the goods to a qualifying purchaser at the sta= ndard rate of VAT, the qualifying purchaser will be entitled to recover the= VAT through the VAT Refund Administrator (=E2=80=9CVRA=E2=80=9D) mechanism= . The VAT would therefore not become an irrecoverable cost to the purchaser= if the purchaser subsequently exports the goods and claims the VAT back th= rough the VRA. >=C2=A0 >Summary >The above is a high-level overview of the relevant circumstances where ind= irect exports may be made at the zero rate of VAT. In practice care should = be taken when entering into these transactions as it is often fraught with = danger.=20 >=C2=A0 >Sometimes it=E2=80=99s better to let the deal go than harming your busines= s! Not always an easy decision in the real world though. >=C2=A0 >=C2=A0 >=C2=A0 >=E2=80=9C This > email communication is intended only for the use of the individual or=20 >entity to which it is addressed and may contain information that is=20 >proprietary, privileged, confidential and exempt from disclosure under=20 >the applicable laws of the Republic of South Africa, which may not be=20 >distributed without the consent of the sender. If you are not the=20 >intended recipient of the email communication, or if it reasonably=20 >appears that this communication was sent to you in error, please do not=20 >disseminate, distribute or copy the communication, by email or=20 >otherwise. Instead, please notify me immediately by return email=20 >(including the original message in your reply) and by telephone =C2=A0and= =20 >then delete and discard all copies of the communication. --=20 =E2=80=9CThis email communication is intended only for the use of the individual=20 or=20 entity to which it is addressed and may contain information that is=20 proprietary, privileged, confidential and exempt from disclosure under=20 the=20 applicable laws of the Republic of South Africa, which may not be=20 distributed without the consent of the sender. If you are not the=20 intended=20 recipient of the email communication, or if it reasonably=20 appears that=20 this communication was sent to you in error, please do not=20 disseminate,=20 distribute or copy the communication, by email or=20 otherwise. Instead,=20 please notify me immediately by return email=20 (including the original=20 message in your reply) and by telephone =C2=A0and=20 then delete and discard all=20 copies of the communication. ----ALT--wO4hGGuU7jKNeHJBQrUQ6qbUvuEepITq1648790364 Content-Type: text/html; charset="UTF-8" Content-Transfer-Encoding: quoted-printable

Bom dia Mfo

=20

Please see email below and let me know when you are availabl= e to talk.

=20

I want to elaborate on the email.

=20

Regards
Michael Nkuna

=20

--
Sent from Outlook Email App for Android

-------- Forwarded Message --------
From: gary.cfo@charnaud.co.za
To: dries.sales@charnaud.co.za, Maritza Harmse <= a href=3D"mailto:maritza.jhbsales@charnaud.co.za">maritza.jhbsales@charnaud= .co.za, Michael Nkuna m= ichael.sales@charnaud.co.za
Cc: Sohiba Haffeze sohiba.cost@charnaud.co.za, Fahmida Lotan fahmida.export@charnaud.co.za=
Date: Thursday, 31 March 2022, 07:18am +02:00
Subject: ZERO-RA= TED INDIRECT EXPORTS - WHEN SHOULD I?

=09 =20 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09
=09

https://tuffiassand= berg.co.za/zero-rated-indirect-exports-when-should-i/

=C2=A0

FEBRUARY = 5, 2021

Tax

South African supplier= s are often requested (more often bullied) to apply the zero-rate of VAT to= supplies made to non-residents where the non-resident purchaser takes poss= ession of the goods in South Africa.

= This article deals with the circumstances under which a South African suppl= ier may supply goods at the zero-rate of VAT to non-residents and touches o= n the pitfalls and risks assumed by the South African supplier.

=C2=A0

Int= roduction

Today business is tough an= d margins under pressure. This means that customers often hold most of the = negotiation cards in their hands. A supplier basically has to do what it ha= s to do to clinch a deal. This is why suppliers are often coerced into supp= lying goods at the zero-rate of VAT because =E2=80=9Cthe other supplier aro= und the corner applies the zero-rate=E2=80=9D.=C2=A0

=C2=A0

Does the abov= e sound familiar? Then read on =E2=80=A6

=C2=A0

Direct versus indirect exp= orts

The distinction between direct = and indirect export is critical as direct export must be supplied at the ze= ro rate of VAT while in the case of indirect exports the supplier has the o= ption to apply the zero rate under certain circumstances.

=C2=A0

Direct ex= port occurs where the supplier either physically delivers the goods outside= South Africa or arranges for the goods to be delivered outside South Afric= a by the supplier=E2=80=99s cartage contractor. Supplies falling into this = category must be supplied at the zero rate of VAT. The supplier has no opti= on to standard rate the supplies.

= =C2=A0

Nice and straight forward. No = uncertainty here. But then come indirect exports =E2=80=A6

=C2=A0

Indirect= exports occur where ownership and possession of the goods pass in South Af= rica and the purchaser removes the goods from South Africa. Indirect export= s may be made at the zero rate of VAT under certain circumstances.

=C2=A0

= When may an indirect export be zero-rated?

As a point of departure an indirect export may only be zero-rated if = the supply is made to a specific category of person referred as =E2=80=9Cqu= alifying purchasers=E2=80=9D. The most common categories of qualifying purc= hasers are foreign enterprises, persons who are not residents of South Afri= ca and foreign tourists.

=C2=A0

<= p class=3D"MsoNormal_mr_css_attr">If you can tick the box that the supply i= s made to a qualifying purchaser, the next box that needs to be ticked is t= he manner in which the goods will be exported, i.e. by sea or air, or by ro= ad or rail.

=C2=A0

Exports by sea or air

Terms and conditions apply =E2=80=A6

=C2=A0

The qualifying purchaser= may take possession of the goods at the South African supplier=E2=80=99s p= remises or factory.

=C2=A0

The qualifying purchaser must provide the Sout= h African supplier with proof that the goods have been placed under Customs= Control at the relevant airport or harbour and must provide the South Afri= can supplier with all export documentation.

=C2=A0

A common example of ind= irect exports falling into this category is goods supplied on a Free on Boa= rd (South African Harbour or Airport) (FOB) basis.

=C2=A0

If the goods are= exported by sea or air, the qualifying purchaser that exports the goods ne= eds not be registered as an exporter with Customs and Excise in South Afric= a.

=C2=A0

Exports by road and rail

= This is an area where export mischief (technically referred to as round tri= pping) is most likely to occur. No wonder that various special rules apply = before goods may be supplied at the zero-rate of VAT where indirect exports= are done by road or rail.

=C2=A0

=

Essentially goods can only be exported b= y road or rail at the zero rate of VAT if the qualifying purchaser appoints= a South African agent that takes possession of the goods in South Africa a= nd exports the goods from South Africa. The agent must be registered with C= ustoms and Excise as a transporter of goods in bond.

=C2=A0

Furthermore, t= he qualifying purchaser must be registered in South Africa as an exporter w= ith Customs and Excise before the goods may be supplied to the qualifying p= urchaser at the zero rate of VAT.

=C2= =A0

And it does not end there =E2=80= =A6

=C2=A0

Very strict and detailed documentary retention requirements are= contained in the Regulation governing indirect exports. In practice this e= ffectively limits the circumstances under which a supplier would opt to app= ly the zero rate of VAT to supplies made where formal business relationship= s and arrangements exist.

=C2=A0

=

The downside to zero-rating indirect exp= orts

The potential downside is very r= eal and potentially economically devastating.

=C2=A0

If the relevant docu= mentation is not received within a prescribed period, the supply is deemed = to have been made at the standard rate of VAT and the supplier must pay the= VAT to SARS. As the supplier has already lost control of the goods, it is = unlikely in practice that the supplier would be in a position to recover th= e VAT from the qualifying purchaser.

= =C2=A0

In short, the supplier=E2=80= =99s margin has just been eroded by the VAT payable to SARS!

=C2=A0

When s= hould indirect exports be zero-rated in practice?

In an ideal world indirect exports should only be made where a= n existing business relationship exists and where the supplier has been ind= emnified against potential VAT that may become payable in the future.

=C2=A0

What if the supplier applies the standard rate of VAT?

Where the supplier supplies the goods to a qualifying = purchaser at the standard rate of VAT, the qualifying purchaser will be ent= itled to recover the VAT through the VAT Refund Administrator (=E2=80=9CVRA= =E2=80=9D) mechanism. The VAT would therefore not become an irrecoverable c= ost to the purchaser if the purchaser subsequently exports the goods and cl= aims the VAT back through the VRA.

= =C2=A0

Summary

The above is a high-level overview of the relevant circumst= ances where indirect exports may be made at the zero rate of VAT. In practi= ce care should be taken when entering into these transactions as it is ofte= n fraught with danger.

=C2=A0

Sometimes it=E2=80=99s better to let the de= al go than harming your business! Not always an easy decision in the real w= orld though.

=C2=A0

=C2=A0

=C2=A0


=E2=80=9CThis email communication is intended only for the use of the individual or=20 entity to which it is addressed and may contain information that is=20 proprietary, privileged, confidential and exempt from disclosure under=20 the applicable laws of the Republic of South Africa, which may not be=20 distributed without the consent of the sender. If you are not the=20 intended recipient of the email communication, or if it reasonably=20 appears that this communication was sent to you in error, please do not=20 disseminate, distribute or copy the communication, by email or=20 otherwise. Instead, please notify me immediately by return email=20 (including the original message in your reply) and by telephone =C2=A0and= =20 then delete and discard all copies of the communication.
=09 =09
=09

=E2=80=9CThis email communication is intended only for the use of the individual or=20 entity to which it is addressed and may contain information that is=20 proprietary, privileged, confidential and exempt from disclosure under=20 the applicable laws of the Republic of South Africa, which may not be=20 distributed without the consent of the sender. If you are not the=20 intended recipient of the email communication, or if it reasonably=20 appears that this communication was sent to you in error, please do not=20 disseminate, distribute or copy the communication, by email or=20 otherwise. Instead, please notify me immediately by return email=20 (including the original message in your reply) and by telephone =C2=A0and= =20 then delete and discard all copies of the communication. ----ALT--wO4hGGuU7jKNeHJBQrUQ6qbUvuEepITq1648790364--