SARS updates Interpretation Note 31 — VAT zero-rating receives stronger governance focus
SARS updates Interpretation Note 31 — VAT zero-rating receives stronger governance focus
SARS has issued Interpretation Note 31 (Issue 5), replacing Issue 4 dated 9 March 2016. The note continues to deal with the documentary proof required to support VAT zero-rating under section 11 of the VAT Act.
The core rule has not changed: vendors that apply the zero rate must still retain acceptable documentary proof to substantiate the treatment adopted. If the required evidence is not available, SARS may disallow the zero rate and assess output tax, penalties and interest.
What is significant in Issue 5 is its updated compliance framing. The note modernises terminology, removes outdated references to the 14% VAT rate, gives clearer prominence to related SARS rulings, regulations and VAT guidance, and more explicitly links export-related zero-rating to the relevant documentary requirements.
Most importantly, Issue 5 introduces the concept of a “key office bearer”, signalling a stronger focus on tax governance and internal accountability. Vendors should therefore be able to show not only that the correct documents were retained, but also who within the organisation is responsible for approving zero-rated treatment, maintaining the evidential file and responding to SARS verification requests.
Practical steps for vendors
Vendors should:
- update VAT zero-rating checklists and procedures to reflect Issue 5;
- review export documentation packs against the latest SARS requirements;
- confirm evidence supporting non-resident status where relevant;
- assign clear internal responsibility for approving and documenting zero-rated supplies; and
- perform a sample review of recent zero-rated transactions before the next SARS verification or audit.
Key takeaway: Issue 5 does not change the zero-rating provisions themselves, but it does make the evidential and governance expectations clearer. Vendors should treat the update as an opportunity to refresh their VAT controls, documentation processes and internal accountability framework. Should you require assistance with the above BDO can assists.