Betty Bookkeeper chats about VAT on exports – February 2015

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Hi Betty 

I would like some assistance with a query that was raised by a client. This client (VAT vendor) will be purchasing a product from a South African company and selling it to a company in Angola. The purchase price includes all components, site inspection, labour / installation cost, and one year’s maintenance of the product in Angola.

The South African company is a VAT vendor and is charging a VAT inclusive price. VAT is being charged on the components and the labour.

The following queries have been raised, and I would like to be 100% sure of my facts before replying:

  1. Is my client able to reclaim ALL the VAT charged by the South African company?
  2. The invoice to the company in Angola will be in US$. Does my client have to charge VAT, or is this a zero-rated transaction?

I would also appreciate it if you can indicate any other points that you think I need to advise my client on.

Thanks and regards,
Liza

 

Hi Liza

Here are my answers to your questions…

  1. Yes, your client can claim all input VAT charged by the South African company.
  2. This is an export and therefore a zero-rated supply. The invoice should reflect that VAT is charged at 0%.

Hope that helps!

 

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