Exporters can now apply the 0% value-added tax (VAT) rate when movable goods are delivered directly to terminal operators for export, removing uncertainty created by rules that previously recognised delivery to port authorities but not privately operated terminals.
National Treasury and the South African Revenue Service have amended South Africa’s export regulations to align the zero-rating requirements with the way export cargo is handled operationally at facilities such as Richards Bay Coal Terminal (RBCT).
Previously, a vendor electing to zero-rate an export was required to deliver the goods to the port authority, the master of a ship, a container operator or the pilot of an aircraft or bring them within the control area of an airport authority.
National Treasury said that requirement created difficulties where goods were delivered to a privately operated terminal rather than directly to the port authority.
Citing RBCT as an example of a facility with privately owned and operated coal terminals within the Richards Bay harbour precinct, National Treasury pointed out that RBCT uses port infrastructure and services provided by Transnet National Ports Authority (TNPA).
“In terms of the strict interpretation of the wording of the export regulations, to qualify for zero-rating, the coal must be delivered to the port authority, which would be TNPA not RBCT,” National Treasury said.
“However, since TNPA does not run the terminal, this requirement has become difficult to fulfil.”
The amendment recognises delivery to terminal operators, resolving the discrepancy between the regulatory wording and the way export cargo is handled at facilities such as RBCT.
The regulations were amended under Section 74(1), read with paragraph (d) of the definition of “exported” in Section 1(1), of the VAT Act.
The amended regulations and accompanying explanatory memorandum have been published on the National Treasury website.
