11. Zero rating
(1) Where, but for this section, a supply of goods would be charged with tax at the rate referred to in section 7(1), such supply of goods shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where-
(a) the supplier has supplied the goods (being movable goods) in terms of a sale or instalment credit agreement and-
(i) the supplier has exported the goods in the circumstances contemplated in paragraph (a), (b) or (c) of the definition of “exported” in section 1; or
(ii) the goods have been exported by the recipient and the supplier has elected to supply the goods at the zero rate as contemplated in Part 2 of the regulation referred to in paragraph (d) of the definition of ‘exported’ in section 1: Provided that –
[Words preceding the proviso substituted by section 132 of Act 25 of 2015 effective on 8 January 2016]
(aa) where a supplier has supplied the goods to the recipient in the Republic otherwise than in terms of this subparagraph, such supply shall not be charged with tax at the rate of zero per cent; and
(bb) where the goods have been removed from the Republic by the recipient in accordance with the regulation referred to in paragraph (d) of the definition of ‘exported’ in section 1, such tax shall be refunded to the recipient in accordance with the provisions of section 44(9); or
[Item (bb) substituted by section 132 of Act 25 of 2015 effective on 8 January 2016]
[Paragraph (a) substituted by section 27 of Act 136 of 1991 and section 85 of Act 53 of 1999]
(b) the goods have been supplied in the course of repairing, renovating, modifying, treating, processing, cleaning, reconditioning or manufacture of any goods to which subsection (2)(g)(ii) or (iv) refers and the goods supplied—
(i) are wrought into, affixed to, attached to or otherwise form part of those other goods; or
(ii) being consumable goods, become unusable or worthless as a direct result of being used in that repair, renovation, modification or treatment process; or
[Paragraph (b) amended by section 27(b) of Act 136 of 1991 and by section 81(1)(a) of Act 17 of 2017 effective on 1 April 2018]
(c) the goods (being movable goods) are supplied to a lessee or other person under a rental agreement, charter party or agreement for chartering, if the goods are used exclusively in an export country or by a customs controlled area enterprise or an SEZ operator in a customs controlled area: Provided that this subsection shall not apply where a ‘motor car’ as defined in section 1 is supplied to a person located in a customs controlled area;
[Paragraph (c) substituted by section 98 of Act 32 of 2004, section 81 of Act 20 of 2006 and section 25 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]
(d) the goods (being movable goods) are supplied to a lessee or other person under a rental agreement, charter party or agreement for chartering, if those goods are used by that lessee or other person exclusively in any commercial, financial, industrial, mining, farming, fishing or professional concern conducted in an export country and payment of rent or other consideration under that agreement is effected from such export country; or
[Paragraph (d) substituted by section 98 of Act 32 of 2004]
(e) the supply is to a registered vendor of an enterprise or of a part of an enterprise which is capable of separate operation, where the supplier and the recipient have agreed in writing that such enterprise or part, as the case may be, is disposed of as a going concern: Provided that-
(i) such enterprise or part, as the case may be, shall not be disposed of as a going concern unless-
(aa) such supplier and such recipient have, at the time of the conclusion of the agreement for the disposal of the enterprise or part, as the case may be, agreed in writing that such enterprise or part, as the case may be, will be an income-earning activity on the date of transfer thereof; and
(bb) the assets which are necessary for carrying on such enterprise or part, as the case may be, are disposed of by such supplier to such recipient; and
(cc) in respect of supplies on or after 1 January 2000, such supplier and such recipient have at the time of the conclusion of the agreement for the disposal of such enterprise or part, as the case may be, agreed in writing that the consideration agreed upon for that supply is inclusive of tax at the rate of zero per cent;
[Subparagraph (cc) inserted by section 85 of Act 53 of 1999]
(ii) where the enterprise or part, as the case may be, disposed of as a going concern has been carried on in, on or in relation to goods or services applied mainly for purposes of such enterprise or part, as the case may be, and partly for other purposes, such goods or services shall, where disposed of to such recipient, for the purposes of this paragraph and section 18A be deemed to form part of such enterprise or part, as the case may be, notwithstanding the provisions of paragraph (v) of the proviso to the definition of “enterprise” in section 1; or
[Paragraph (e) substituted by section 17 of Act 136 of 1992 and section 13 of Act 20 of 1994]
(f) the supply is to the South African Reserve Bank, the South African Mint Company (Proprietary) Limited or any bank registered under the Banks Act, 1990 (Act No. 94 of 1990), of gold in the form of bars, blank coins, ingots, buttons, wire, plate or granules or in solution, which has not undergone any manufacturing process other than the refining thereof or the manufacture or production of such bars, blank coins, ingots, buttons, wire, plate, granules or solution; or
[Paragraph (f) substituted by section 17 of Act 136 of 1992 and section 13 of Act 20 of 1994]
(g) the supply is of such goods used or consumed for agricultural, pastoral or other farming purposes as are set forth in Part A of Schedule 2, provided such supply is made in compliance with such conditions as may be prescribed in the said Part; or
[Paragraph (g) substituted by section 17 of Act 136 of 1992]
(h) the goods consist of fuel levy goods referred to in Fuel Item Levy numbers 195.10.03, 195.10.17, 195.20.01 and 195.20.03 in Part 5A of Schedule No. 1 to the Customs and Excise Act; or
[Paragraph (h) substituted by section 27 of Act 136 of 1991, section 105 of Act 31 of 2005 and section 44 of Act 9 of 2006]
(hA) the goods consist of petroleum oil and oils obtained from bituminous minerals, known as crude, referred to in Heading No. 27.09 in Chapter 27 of Part 1 of Schedule No. 1 to the Customs and Excise Act when supplied for the purpose of being refined for the production of fuel levy goods as defined in section 1 of the Customs and Excise Act; or
[Paragraph (hA) inserted by section 27 of Act 136 of 1991 and substituted by section 105 of Act 31 of 2005]
(hB) ……….
[Paragraph (hB) inserted by section 27 of Act 97 of 1993, substituted by section 153 of Act 60 of 2001 and deleted by section 44 of Act 9 of 2006]
(i) the goods are supplied as contemplated in section 8 (9);
[Paragraph (i) substituted by section 27 of Act 97 of 1993 and section 169 of Act 45 of 2003]
(j) the goods consist of such foodstuffs as are set forth in Part B of Schedule 2, but subject to such conditions as may be prescribed in the said Part; or
[Paragraph (j) inserted by section 27 of Act 136 of 1991 and substituted by section 17 of Act 136 of 1992]
(k) the goods are gold coins supplied as such and which the Reserve Bank has issued in the Republic in accordance with the provisions of section 14 of the South African Reserve Bank Act, 1989 (Act No. 90 of 1989), or which remain in circulation as contemplated in the proviso to subsection (1) of that section; or
[Paragraph (k) inserted by section 17 of Act 136 of 1992]
(l) the goods consist of illuminating kerosene (marked) intended for use as fuel for illuminating or heating, referred to in Fuel Item Levy number 195.10.13 in Part 5A of Schedule No. 1 to the Customs and Excise Act and are not mixed or blended with another substance; or
[Paragraph (l) inserted by section 43 of Act 5 of 2001 and substituted by section 105 of Act 31 of 2005 and section 44 of Act 9 of 2006]
(m) a vendor supplies movable goods, (excluding any ‘motor car’ as defined in section 1), in terms of a sale or instalment credit agreement to a customs controlled area enterprise or an SEZ operator and those goods are physically delivered to that customs controlled area enterprise or SEZ operator in a customs controlled area either-
[Words preceding subparagraph (i) substituted by section 25 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]
(i) by the supplier; or
(ii) by a cartage contractor, whose activities include transporting goods and who is engaged by the supplier to deliver the goods and that supplier is liable for the full cost relating to that delivery;
[Subparagraph (ii) substituted by section 132 of Act 25 of 2015 effective on 1 April 2016]
[Paragraph (m) substituted by section 98 of Act 32 of 2004 and section 81 of Act 20 of 2006]
(mA) a vendor supplies fixed property situated in a customs controlled area to a customs controlled area enterprise or an SEZ operator under any agreement of sale or letting or any other agreement under which the use or permission to use such fixed property is granted;
[Paragraph (mA) inserted by section 81 of Act 20 of 2006 and section 25 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]
(n) the goods consist of-
(i) any old order right or OP26 right as defined in Schedule II of the Mineral and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002), converted into a new right pursuant to item 7(3) of that Schedule if that supply is made pursuant to that conversion; or
[Subparagraph (i) substituted by section 134 of Act 24 of 2011 with effect from 10 January 2012]
(ii) ……….
[Subparagraph (ii) substituted by section 98 of Act 32 of 2004 and deleted by section 134 of Act 24 of 2011 with effect from 10 January 2012]
[Paragraph (n) added by section 169 of Act 45 of 2003]
(o) ……….
[Paragraph (o) added by section 169 of Act 45 of 2003 and deleted by section 105 of Act 31 of 2005]
(p)
(i) the supply of an enterprise or part of an enterprise as a going concern, by a vendor to that vendor’s branch or division, which branch or division is separately registered in terms of section 50(2): Provided that that enterprise or part, as the case may be, shall not be disposed of as a going concern unless-
(aa) that enterprise or part is capable of separate operation; and
(bb) will be an income-earning activity on the date of transfer thereof; and
(cc) a tax invoice issued in accordance with section 20 in relation to that supply is inclusive of tax at the rate of zero per cent; or
(ii) the supply of an enterprise, branch or division, as contemplated in section 50(2), as a going concern to a separately registered enterprise of that vendor: Provided that that enterprise or part, as the case may be, shall not be disposed of as a going concern unless-
(aa) that enterprise or part is capable of separate operation; and
(bb) will be an income-earning activity on the date of transfer thereof; and
(cc) a tax invoice issued in accordance with section 20 in relation to that supply is inclusive of tax at the rate of zero per cent;
[Paragraph (p) inserted by section 98 of Act 32 of 2004]
(q) the goods-
(i) are supplied by a vendor to a person who is not a resident of the Republic and not a vendor and who has contracted with that vendor to deliver goods to a recipient, who is a vendor in the Republic; and
(ii) form part of a supply by the person referred to in paragraph (i) to the recipient; and
(iii) are used by the recipient wholly for the purposes of consumption, use or supply in the course of making taxable supplies; or
[Paragraph (q) added by section 105 of Act 31 of 2005 and amended by section 81 of Act 20 of 2006]
(r) compensation is paid by a public authority in terms of section 19 of the Animal Diseases Act, 1984 (Act No. 35 of 1984) for the supply of a ‘controlled animal or thing’ as defined in that Act to that public authority:
[Paragraph (r) added by section 81 of Act 20 of 2006]
(s) the goods (being fixed property) are supplied to the Cabinet member responsible for land reform who acquired those goods in terms of the Provision of Land and Assistance Act, 1993 (Act No. 126 of 1993), or section 42E of the Restitution of Land Rights Act, 1994 (Act No. 22 of 1994); or
[Paragraph (s) added by section 108 of Act 60 of 2008 and substituted by section 169 of Act 31 of 2013 effective on 1 April 2014]
(t) the goods (being fixed property) are supplied to a person to the extent that the consideration for those goods is an advance or subsidy granted in terms of the Provision of Land and Assistance Act, 1993 (Act No. 126 of 1993); or
[Paragraph (t) added by section 108 of Act 60 of 2008 with effect from 31 Oct 2009]
(u) the supply of goods, other than the supply of goods by an inbound duty and tax free shop, which have been imported and entered for storage in a licensed Customs and Excise storage warehouse but have not been entered for home consumption; or
[Paragraph (u) added by section 108 of Act 60 of 2008]
(v) the supply of goods by an inbound duty and tax free shop; or
[Paragraph (v) added by section 108(1)(a) of Act 60 of 2008 and amended by section 70(1) of Act 34 of 2019 deemed effective on 1 April, 2019]
(w) the goods supplied consist of sanitary towels (pads) as are set forth in Part C of Schedule 2:
[Paragraph (w) added by section 70(1) of Act 34 of 2019 deemed effective on 1 April, 2019]
Provided that paragraphs (a), (b), (c), (d) and (i) of this subsection shall not apply in respect of any supply of goods by a vendor if in respect of such goods input tax contemplated in paragraph (b) of the definition of “input tax” in section 1 has been deducted in terms of section 16 (3) by that vendor or any other person where that vendor and that other person are connected persons.
[Subsection (1) amended by section 28 of Act 27 of 1997]
(2) Where, but for this section, a supply of services, other than services contemplated in section 11(2)(k) that are electronic services, would be charged with tax at the rate referred to in section 7(1), such supply of services shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where-
[Words preceding paragraph (a) substituted by section 96 of Act 43 of 2014 effective on 1 April 2015]
(a) the services (not being ancillary transport services) comprise the transport of passengers or goods-
(i) from a place outside the Republic to another place outside the Republic; or
[Subparagraph (i) substituted by section 13 of Act 20 of 1994]
(ii) from a place in the Republic to a place in an export country; or
[Subparagraph (ii) substituted by section 13 of Act 20 of 1994]
(iii) from a place in an export country to a place in the Republic; or
[Subparagraph (iii) substituted by section 13 of Act 20 of 1994]
(b) the services comprise the transport of passengers from a place in the Republic to another place in the Republic to the extent that that transport is by aircraft and constitutes “international carriage” as defined in Article 1 of the Convention set out in the Schedule to the Carriage by Air Act, 1946 (Act No. 17 of 1946); or
[Paragraph (b) substituted by section 13 of Act 20 of 1994]
(c) the services (including any ancillary transport services) comprise the transport of goods from a place in the Republic to another place in the Republic to the extent that those services are supplied by the same supplier as part of the supply of services to which paragraph (a) applies; or
[Paragraph (c) substituted by section 13 of Act 20 of 1994]
(d)
(i) the services comprise the—
(aa) insuring;
(bb) arranging of the insurance; or
(cc) arranging of the transport,
of passengers or goods to which any provisions of paragraph (a), (b) or (c) apply; or
(ii) insuring or the arranging of the insurance of passengers on an international journey, where the insurance of those passengers is provided under a single inbound or outbound insurance policy in respect of which a single premium is levied; or
[Paragraph (d) substituted by section 81(1)(b) of Act 17 of 2017 effective on 1 April 2018]
(e) the services comprise the transport of goods or any ancillary transport services supplied directly in connection with the exportation from or the importation into the Republic of goods or the movement of goods through the Republic from one export country to another export country, where such services are supplied directly to a person who is not a resident of the Republic and is not a vendor, otherwise than through an agent or other person; or
[Paragraph (e) substituted by section 13 of Act 20 of 1994]
(f) the services are supplied directly in connection with land, or any improvement thereto, situated in any export country; or
(g) the services are supplied directly in respect of-
(i) movable property (excluding debt securities, equity securities or participatory securities, as respectively defined in section 2(2), listed on an exchange as defined in section 1 of the Financial Markets Act, 2012 (Act 19 of 2012) and licensed under section 9 of that Act) situated in any export country at the time the services are rendered; or;
[Subparagraph (i) substituted by section 81(1)(c) of Act 17 of 2017 effective on 1 April 2018]
(ii) goods temporarily admitted into the Republic from an export country which are exempt from tax on importation under Items 470 and 480 of paragraph 8 of Schedule 1; or
[Subparagraph (ii) amended by section 27 of Act 97 of 1993 and substituted by section 153 of Act 60 of 2001]
(iii) goods in respect of which the provisions of paragraph (b) or (c) of the definition of “exported” in section 1 apply; or
(iv) the repair, maintenance, cleaning or reconditioning of a foreign-going ship or foreign-going aircraft; or
(h) the services comprise-
(i) the handling, pilotage, salvage or towage of any foreign-going ship or foreign-going aircraft while situated in the Republic; or
[Subparagraph (i) substituted by section 13 of Act 20 of 1994]
(ii) services provided in connection with the operation or management of any foreign-going ship or foreign-going aircraft; or
(iii) the storage, repair, maintenance, cleaning, management or arranging the provision of a container referred to in paragraph (1)(i) of Schedule 1 or the arranging of those services,
[Subparagraph (iii) inserted by section 17 of Act 136 of 1992 and substituted by section 98 of Act 32 of 2004]
where the services are supplied directly to a person who is not a resident of the Republic and is not a vendor, otherwise than through an agent or other person; or
[Paragraph (h) amended by section 13 of Act 20 of 1994]
(i) the services of arranging-
(i) the supply of goods as contemplated in paragraph (b) or (c) of the definition of “exported”; or
(ii) the supply of services referred to in paragraph (g)(iv) or (h); or
(iii) the transport of goods (including ancillary transport services) within the Republic,
[Subparagraph (iii) substituted by section 13 of Act 20 of 1994]
for a person who is not a resident of the Republic and is not a vendor; or
[Paragraph (i) amended by section 13 of Act 20 of 1994]
(j) the services comprise the repair, maintenance, cleaning or reconditioning of a railway train operated by a person who is not a resident of the Republic and is not a vendor; or
[Paragraph (j) substituted by section 13 of Act 20 of 1994]
(k) the services are physically rendered elsewhere than in the Republic or to a customs controlled area enterprise or an SEZ operator in a customs controlled area; or
[Paragraph (k) substituted by section 13 of Act 20 of 1994, section 28 of Act 27 of 1997, section 169 of Act 45 of 2003, section 81 of Act 20 of 2006 and section 25 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]
(l) the services are supplied to a person who is not a resident of the Republic, not being services which are supplied directly-
(i) in connection with land or any improvements thereto situated inside the Republic; or
(ii) in connection with movable property (excluding debt securities, equity securities or participatory securities) situated inside the Republic at the time the services are rendered, except movable property which-
(aa) is exported to the said person subsequent to the supply of such services; or
(bb) forms part of a supply by the said person to a registered vendor and such services are supplied to the said person for purposes of such supply to the registered vendor; or
[Subparagraph (ii) amended by section 85 of Act 53 of 1999]
(iii) to the said person or any other person, other than in circumstances contemplated in subparagraph (ii) (bb), if the said person or such other person is in the Republic at the time the services are rendered,
[Subparagraph (iii) substituted by section 85 of Act 53 of 1999]
and not being services which are the acceptance by any person of an obligation to refrain from carrying on any enterprise, to the extent that the carrying on of that enterprise would have occurred within the Republic; or
[Paragraph (l) substituted by section 13 of Act 20 of 1994, amended by section 28 of Act 27 of 1997 and substituted by section 89 of Act 30 of 1998]
(m) the services comprise-
(i) the filing, prosecution, granting, maintenance, transfer, assignment, licensing or enforcement, including the incidental supply by the supplier of such services of any other services which are necessary for the supply of such services, of intellectual property rights, including patents, designs, trade marks, copyrights, know-how, confidential information, trade secrets or similar rights; or
[Subparagraph (i) substituted by section 13 of Act 20 of 1994]
(ii) the acceptance by any person of an obligation to refrain from pursuing or exercising in whole or in part any such rights,
where and to the extent that those rights are for use outside the Republic; or
[Paragraph (m) amended by section 13 of Act 20 of 1994]
(n) the services comprise the carrying on by a welfare organisation of the activities referred to in the definition of ‘welfare organisation’ in section 1 and to the extent that any payment in respect of those services is made in terms of section 8(5) those services shall be deemed to be supplied by that organisation to a public authority or municipality; or
[Paragraph (n) substituted by section 169 of Act 45 of 2003 and section 44 of Act 9 of 2006]
(o) the services are supplied as contemplated in section 8(9) by a vendor, not being services which are supplied directly-
(i) in connection with land or any improvements thereto situated inside the Republic; or
(ii) in connection with movable property (excluding debt securities, equity securities or participatory securities) situated inside the Republic at the time the services are rendered, except movable property which-
(aa) is consigned or delivered to the said person at an address in an export country subsequent to the supply of such services; or
(bb) forms part of a supply by the said person to a registered vendor and such services are supplied to the said person for purposes of such supply to the registered vendor; or
(iii) to the said person or any other person, other than in the circumstances contemplated in subparagraph (ii)(bb), if the said person or such other person is in the Republic at the time that the services are rendered; or
[Paragraph (o) substituted by section 27 of Act 97 of 1993 and section 169 of Act 45 of 2003 and amended by section 44 of Act 9 of 2006]
(p) ……….
[Paragraph (p) added by section 17 of Act 136 of 1992 and deleted by section 169 of Act 45 of 2003]
(q) the services are deemed to be supplied in terms of section 8(5B);
[Paragraph (q) added by section 85 of Act 53 of 1999, substituted by section 169 of Act 45 of 2003 and section 105 of Act 31 of 2005, amended by section 44 of Act 9 of 2006 and substituted by section 81 of Act 20 of 2006 and section 29 of Act 36 of 2007]
(r) the services comprise of the vocational training of employees (other than educational services contemplated in section 12(h)) for the benefit of an employer who is not a resident of the Republic and who is not a vendor: Provided that this paragraph shall not apply where the supply is made to a person who is a resident of the Republic or a vendor; or
[Paragraph (r) added by section 77 of Act 30 of 2000, amended by section 169 of Act 45 of 2003 and substituted by section 132 of Act 25 of 2015 effective on 1 April 2016]
(s) the services are deemed to be supplied to a public authority or municipality in terms of section 8(23); or
[Paragraph (s) added by section 169 of Act 45 of 2003, substituted by section 44 of Act 9 of 2006, deleted by section 132 of Act 25 of 2015 and re-inserted by section 81 of Act 17 of 2017 effective on 1 April 2017]
(t) the services are deemed to be supplied in terms of section 8(5A); or
[Paragraph (t) added by section 98 of Act 32 of 2004 and amended by section 21 of Act 9 of 2005, section 105 of Act 31 of 2005 and section 44 of Act 9 of 2006]
(u) the services are deemed to be supplied in terms of section 8(5) by a designated entity in respect of any payment made in terms of section 10(1)(f) of the Skills Development Act, 1998 (Act No. 97 of 1998), to that designated entity; or
[Paragraph (u) added by section 21 of Act 9 of 2005 and amended by section 105 of Act 31 of 2005]
(v) the services relate to goods under warranty to the extent that the services are-
(i) provided in terms of that warranty;
(ii) supplied to the warrantor for consideration under that warranty given by the warrantor who is—
(aa) not a resident of the Republic;
(bb) not a vendor; and
(cc) outside the Republic at the time the services are rendered; and
(iii) in respect of goods that were subject to tax upon importation (in terms of section 7(1)(b) of this Act); or
[Paragraph (v) added by section 105 of Act 31 of 2005 and amended by section 44 of Act 9 of 2006]
(w) a ‘municipal rate’ as defined in section 1, is levied by a municipality; or
[Paragraph (w) added by section 44 of Act 9 of 2006 and amended by section 29 of Act 36 of 2007]
(x) the services are supplied by a vendor, being the owner of a horse, to the operator of a horse-racing event to the extent of any consideration paid as a result of the successful participation of that horse in that event.
[Paragraph (x) added by section 29 of Act 36 of 2007]
[Subsection (2) amended by section 28 of Act 27 of 1997]
(y) the services as contemplated in the International Telecommunication Union Regulations contained in the Final Acts of the World Conference on International Telecommunications (Dubai, 2012) and supplied by Telecommunications Service Providers registered in the Republic in terms of the Electronic Communications Act, 2005 (Act 36 of 2005), to International Telecommunications Service Providers, provided that such services are not supplied to a branch, main business or customer of the International Telecommunications Service Providers situated in the Republic at the time the services are rendered, unless such services are international roaming services.
[Subsection (2) amended by section 28(b) of Act 27 of 1997 and by section 96(1)(b) of Act 43 of 2014 effective on 1 April, 2015. Paragraph (y) added by section 64(1) of Act 23 of 2020 and substituted by section 52(1) of Act 20 of 2021 effective on 1 January, 2022]
(3) Where a rate of zero per cent has been applied by any vendor under the provisions of this section, the vendor shall obtain and retain such documentary proof substantiating the vendor’s entitlement to apply the said rate under those provisions as is acceptable to the Commissioner.
[Subsection (3) substituted by section 108 of Act 60 of 2008]