The ruling only applies to Association Members, thus non-members within the industry cannot apply the ruling - even more reason to join if you are in the events and exhibition industry!
The ruling applies to the selling of space - thus is now equally applicable to organisers and venues, whereas the previous ruling applied specifically to suppliers in the industry who were EXSA members.
Thus this latest ruling from SARS confirms that under certain specific circumstances, VAT for services supplied by EXSA Members to 'foreign' exhibitors may be zero-rated has been re-affirmed. In addition, the ruling has been expanded to not only include the provision of services by EXSA Members, but is also now applicable for the selling of exhibition space by EXSA Members.
The important tests are as follows:
- The ruling applies to EXSA Members only
- The services must be supplied to a foreign entity that is not resident in South Africa,
- The foreign company must not carry on any enterprise or have any office in South Africa,
- The foreign company must not be registered or must not be required to register for VAT in South Africa,
- The goods are rented or services are supplied for use exclusively to an enterprise operating in an export country,
- The payment for the goods / services are affected from the export country, and
- That the required supporting documentation is retained (refer paragraph 5.5 and 5.6 of the ruling).
If these conditions are present then VAT may be charged at the rate of zero percent.
The ruling does not apply for the provision of services to SA entities or to foreign entities which carry on an enterprise in SA - VAT at the applicable rate (14%) would be applicable.
EXSA cannot be held liable for Member's application of the above ruling under any circumstances. In this vein it is strongly advised that you consult your tax advisors to check that you are applying the principles of the ruling correctly. Your attention is drawn to clause 5.3 which outlines that penalties and interest will be applicable if the ruling is incorrectly applied, and the ruling may even be withdrawn for all members.
EXSA will be, as part of the condition of the Ruling, forwarding the details of all fully-paid members of the Association, along with corresponding VAT numbers to SARS, and then subsequently every six months. The Ruling is applicable for a two year period to August 2012.
For further information, please contact the EXSA office on 011 805 7272.