Vat Practice Note no13

 

VAT Practice Note: No 13

VAT PRACTICE NOTE: NO 13

06 September 1994

Professional hunters and taxidermists
(Section 11(1)(a) of the Act)


1. Introduction

1.1 Paragraph 2 of this practice note intends to make it possible for professional hunters to supply
trophies to foreign hunters at the zero rate if there is a substantial delay in the consignment of the
goods to the recipient (at an address in an export counter) after the "supply" of the goods has taken
place, provided the delay is caused merely by the fact that the treatment referred to in 2.1 has not
yet been completed. A trophy will accordingly be regarded as having been exported by a professional
hunter if either the conditions set out in paragraph 2.2 below, or those set out in paragraph 2.3 below
were complied with.

1.2 Paragraph 3 of this practice note explains the position of taxidermists.

1.3 The arrangements set out in paragraphs 2 and 3 have been made in terms of section 72 of the
Act.

2. Professional hunters

2.1 Section 11(1)(a) of the Value-Added Tax Act, 1991 ("the Act"), has the effect that a supplier of
goods will be charged with tax at the rate of zero per cent where he has supplied movable goods in
terms of a sale or instalment credit agreement and has exported the goods. The term "exported" is
defined in section 1 of the Act as mening, inter alia -

"(a) consigned or delivered by the vendor to the recipient at an address in an export country as
evidenced by documentary proof acceptable to the Commissioner".

Section 9(1) of the Act provides that a supply of goods shall be deemed to take place, inter alia, at
the time when an invoice is issued by the supplier, or at the time when any payment of consideration
is received by the supplier in respect of that supply, whichever time is earlier. In practice, foreign
hunters, to whom professional hunters sell animals, usually make payment of a portion or the whole
of the purchase price before they leave South Africa. The professional hunter would in any event issue
an invoice to the foreign hunter before the latter leaves South Africa.

However, the consignment to the foreign hunter of such parts of the animals as are retained by him
after they have been hunted ("the trophies") can usually not be done simultaneously with the "supply"
of the trophies to the foreign hunter, since the trophies first have to undergo some or other form of
treatment. That treatment may either consist of work done by the professional hunter himself (such
as "raw preparation"), or of work done by a taxidermist. The consignment can usually only take place
after the aforementioned work done by the professional hunter or taxidermist has been completed.

2.2 Delivery to taxidermist

2.2.1 The professional hunter should have supplied the animal to a person ("the recipient") who holds
a passport issued by an export country and who is not ordinarily resident in the Republic or a specified
country.

2.2.2 The professional hunter should, within six months after the animal was supplied by the
professional hunter to the recipient, have delivered the trophy to a taxidermist carrying on business at
an address in South Africa in order that the trophy may be preserved and/or mounted by that
taxidermist.

2.2.3 The professional hunter must, at the time of delivery referred to in 2.2.2, retain a copy from his
taxidermist’s instruction register, which copy must contain at least the following information -

(a) the date of such instruction;
(b) the name and address of the recipient;
(c) the recipient’s passport number and the name of the country by which the passport was issued;
(d) a description of the trophy or trophies; and
(e) the name and address of the taxidermist and the nature of the instructions which he received.

In addition, the taxidermist must within 30 days provide a copy of his order to the professional
hunter. This order should correspond with the professional hunter’s taxidermy instruction register and
will serve as proof that the trophies listed in the professional hunter’s register have in fact been
delivered to the taxidermist.

2.2.4 The taxidermist must, after completion of the preservation and/or mounting, as the case may
be, consign the trophy to the recipient. The consignment must be to an address in an export country
as evidenced by documentary proof acceptable to the Commissioner and will be deemed also to be an
export by the professional hunter.

2.2.5 The consignment referred to in paragraph 2.2.4 must take place within eighteen months after
the delivery of the trophy by the professional hunter to such taxidermist. The professional hunter
may, however, before the expiry of the aforementioned period of eighteen months, or within such
reasonable time after such expiry as the Commissioner may allow in his discretion, apply to the
Commissioner for an extension of the eighteen month period. The Commissioner may allow such
extension on any grounds which he may deem reasonable. The Commissioner may, in this regard,
take into consideration the factors mentioned below, or any other factors which may be relevant -

(a) whether there is a probability that the trophy will in fact be consigned to the recipient at an
address in an export country within a reasonable time after expiry of the aforementioned eighteen
month period; or

(b) whether the other conditions of this practice note were complied with properly.

2.2.6 The professional hunter must, within the period or extended period referred to in paragraph
2.2.5, obtain possession of documentary proof to the effect that the trophy has been consigned to the
recipient at an address in an export country.

2.2.7 The professional hunter must maintain such register as he may be required to maintain in terms
of the applicable nature conservation ordinance, or in terms of any law which may replace such
ordinance.

2.3 Raw preparation by professional hunter himself

2.3.1 A distinction must be drawn between the cost of the trophy which is to be exported and the cost
of the raw preparation of the trophy which is a service supplied to the recipient and is subject to the
standard rate of VAT.

2.3.2 The professional hunter should have supplied the animal to a person ("the recipient") who holds
a passport issued by an export country and who is not ordinarily resident in the Republic or a specified
country.

2.3.3 The professional hunter should have retained the trophy of the aforementioned animal for
purposes of the raw preparation thereof by him.

The expression "raw preparation" means all work which may be required to ensure that the trophy
does not undergo decay before it is properly preserved and/or mounted by a taxidermist. Such work
may include, but is not necessarily limited to, the salting, drying and disinfection of the trophy.

2.3.4 The professional hunter must, after completion of the raw preparation, consign the trophy to the
recipient at an address in an export country as evidenced by documentary proof acceptable to the
Commissioner.

2.3.5 The consignment referred to in paragraph 2.3.4 must take place within six months after the
supply of the trophy by the professional hunter to the recipient. The professional hunter may,
however, before the expiry of the aforementioned period of six months, or within such reasonable
time after such expiry as the Commissioner may allow in his discretion, apply to the Commissioner for
an extension of the six months. The Commissioner may allow such extension on any grounds which he
may deem reasonable. The Commissioner may, in this regard, take into consideration the factors
mentioned below or any factors which may be relevant -

(a) whether there is a probability that the trophy will in fact be consigned to the recipient at an
address in an export country within a reasonable time after expiry of the aforementioned six month
period; or

(b) whether the other conditions of this practice note were complied with properly.

2.3.6 The professional hunter must maintain such register as he may be required to maintain in terms
of the applicable nature conservation ordinance, or in terms of any law which may replace such
ordinance.

2.4 The question whether the supply of any accommodation by a professional hunter will be subject to
tax will depend on the applicability of the relevant provisions of the Act.

2.5 The provisions of section 55 of the Act shall apply to the documents referred to in paragraph 2.2.3
as if they were documents of the nature described in section 11(3) of the Act.

3. Taxidermists

3.1 In the past, the services supplied by taxidermists during the course of preserving and/or mounting
a trophy have been subject to VAT as the services are supplied directly in connection with movable
property situated in the RSA at the time the services are supplied [section 11(2)(l)].

It is, however, now accepted that taxidermists manufacture products some of which are destined for
export.

3.1.1 If a trophy is consigned by a taxidermist to a recipient at an address in an export country as
evidenced by documentary proof acceptable to the Commissioner, then the total amount charged by
the taxidermist for mounting the trophy shall be apportioned as follows for VAT purposes :

(a) The manufacture of the trophy into the final mounted product shall be deemed to constitute 70%
of the total amount charged by the taxidermist and shall be subject to VAT at the zero rate; and

(b) Services supplied in connection with the raw preparation shall be deemed to constitute 30% of the
total amount charged by the taxidermist and shall be subject to VAT at the standard rate.

3.1.2 If the taxidermist supplies only the service of raw preparation and/or tanning of flat skins, the
full cost of such service is subject to VAT at the standard rate, as is the case where the raw
preparation is supplied by the professional hunter (see paragraph 2.3.1).

3.1.3 The expression "raw preparation" means all work which may be required to ensure that the
trophy does not undergo decay before it is properly preserved and/or mounted by a taxidermist. Such
work may include, but is not necessarily limited to, the sailing, drying and disinfection of the trophy.

3.1.4 This arrangement is effective from 2 December 1993.

4. Documentary proof

4.1 In the normal course of events the taxidermist will be in possession of copies of the following
documents after the consignment referred to in paragraph 3.1.1 has taken place -

(a) DA-550 - bill of export;
(b) airwaybill;
(c) F178 - exchange control declaration;
(d) Form E - proof of payment from export country.

4.2 Paragraph 2.2.6 of this practice note requires the professional hunter to obtain possession, within
a certain period, of documentary proof to the effect that the trophy has been consigned to the
recipient at an address in an export country. Copies of the DA-550 and airwaybill will suffice in this
instance.

4.3 Where the consignment referred to in paragraph 2.3.4 has taken place, the documentary proof
referred to in 4.1 above will be acceptable.