VAT & Indirect Exports: What South African sellers should know
6 August 2025
Indirect Exports offer valuable opportunities for South African businesses to expand internationally, but navigating the VAT regulations requires caution. When the foreign buyer takes responsibility for arranging transport, the supplier (also referred to as the seller) must meet specific criteria to apply a preferential VAT rate. One of the most crucial requirements is securing proper export documentation within a set timeframe. If these conditions are not satisfied, the transaction may attract a standard VAT rate, even if the goods have physically left the country.
Direct vs. Indirect Exports – Key differences
Understanding how VAT applies when exporting goods from South Africa is essential:
Direct Exports: The supplier arranges transport and the exportation of the goods to a recipient outside South Africa. When proper documentation is retained and the goods are exported via a designated port, the transaction may qualify for VAT at the zero rate. Direct Exports have a lower risk, as the supplier controls the compliance process.
Indirect Exports : Only applies to goods when the foreign buyer collects the goods in South Africa and takes responsibility for exporting the goods. The supplier must rely on the buyer for proof of export, making this method riskier. Zero-rating is possible under strict conditions, as outlined in Government Notice No. R.316, GG No. 37580, issued under section 74(1) of the VAT Act No. 89 (1991).
VAT options for Indirect Exports
Suppliers have two options when it comes to Indirect Exports:
Option 1: Charge 15% VAT
The buyer may claim a refund through the VAT Refund Administrator. Goods must be exported within 90 days from the date of the tax invoice. The VAT refund claim must be submitted within 90 days from the date of export.
Option 2: Apply 0% VAT
Only allowed if:
The buyer is a qualifying foreign buyer.
Goods are exported via a designated commercial port.
The supplier obtains complete export documentation within 90 days, from the earlier of the date the invoice is issued or the date any payment is received.
Why 15% VAT is often the safer option
While zero-rating benefits the buyer, it places the risk on the supplier. If the buyer delays or fails to timeously provide the required documents, the supplier becomes liable for the VAT. Charging 15% VAT upfront, shifts the compliance burden to the buyer.
Timelines & extensions
Suppliers must adhere to the prescribed deadlines for submitting export documentation, but extensions may be granted under specific circumstances.
The standard deadline for export documentation is 90 days which is calculated from the date the movable goods are required to be exported (general rule is earlier of date of invoice or the date payment is received). SARS may grant extensions of up to 180 days in exceptional cases, such as:
Natural disasters
Customs or logistics delays
Exceptional export conditions
Final thoughts for sellers
If you are unsure about zero-rating an Indirect export, it is usually safer to charge VAT at 15%. This protects your business from unexpected SARS liabilities.
To stay compliant:
Have clear written agreements with buyers.
Understand who is responsible for transport and documentation.
Always collect and retain the correct export documents on time.
In export deals, clarity, caution and our Indirect Tax team are your best export partners.
Author:
Sindisiwe Zinyongo, Assistant Manager
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