List of Zero-rated VAT Items in South Africa:
In South Africa, certain goods and services are classified as zero-rated for Value-Added Tax (VAT), meaning they are taxed at a VAT rate of 0%. This classification helps reduce the cost of essential items and services for consumers. Below is a detailed list of zero-rated VAT items and exempt supplies in South Africa.
Zero-Rated VAT Items
The following goods and services are zero-rated for VAT purposes:
- Exports: Goods and services sold to customers outside South Africa.
- 19 Basic Food Items: Essential foodstuffs to support affordability.
- Brown bread
- Maize meal
- Samp
- Mealie rice
- Dried mealies
- Dried beans
- Lentils
- Pilchards/sardinella in tins
- Milk powder
- Dairy powder blend
- Rice
- Vegetables
- Fruit
- Vegetable oil
- Milk
- Cultured milk
- Brown wheaten meal
- Eggs
- Edible legumes and pulses of leguminous plants
- Illuminating Paraffin: Used primarily for cooking and lighting by lower-income households.
- Goods Subject to the Fuel Levy: Including petrol and diesel.
- International Transport Services: Transport of goods and passengers across international borders.
- Farming Inputs: Supplies necessary for agricultural production, such as seeds and fertilisers.
- Sales of Going Concerns: Sale of businesses that are capable of being operated on an ongoing basis.
- Certain Government Grants: Specific grants provided by the government that qualify for zero-rating.
Also, check the South African VAT ACT below:
Supplies Exempt from VAT
In addition to zero-rated items, some goods and services are exempt from VAT. Exempt supplies do not attract VAT, and suppliers cannot claim input VAT on related purchases. These include:
- Non-Fee Related Financial Services: Financial services that do not charge explicit fees, such as interest earned on savings accounts.
- Educational Services: Provided by approved educational institutions, covering primary, secondary, and tertiary education.
- Residential Rental Accommodation: Long-term residential rental properties.
- Public Road and Rail Transport: Transport services provided to the general public using roads and railways.
Importance of Zero-Rated and Exempt Items
The classification of certain items as zero-rated or exempt is crucial for reducing the tax burden on essential goods and services, making them more affordable for consumers. Understanding these categories helps both businesses and consumers navigate VAT regulations effectively, ensuring compliance and optimising financial planning.
By knowing which items are zero-rated and exempt from VAT, businesses can better manage their VAT obligations and consumers can benefit from lower costs on essential goods and services.