Your Evidence for Zero-Rating Just Got an Update. Are You Ready?
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You applied the zero rate. You issued the invoice. But did you keep the right documents?
SARS has just updated Interpretation Note 31, now in Issue 5, published on 17 July 2026. This is SARS' primary guidance on the documentary proof it regards as acceptable for zero-rating under section 11 of the VAT Act. If your documents do not match what this Note requires, the zero rate does not hold, and output tax becomes your problem. Here is what has changed, and what every practitioner dealing with exports, cross-border services, or specialised supplies needs to do right now.
What IN 31 Actually Does
Section 11(3) of the VAT Act places a strict obligation on vendors: you must obtain and retain documentary proof acceptable to the Commissioner before you can apply the zero rate to any supply under section 11(1) or 11(2). The Note does not change the law. It tells you, category by category, exactly what that proof must look like.
Issue 5 updates two comprehensive reference tables covering all zero-rated supplies. Table A deals with supplies of goods under section 11(1). Table B deals with supplies of services under section 11(2). Together, they cover everything from direct exports and foreign-going ships to going concerns, SEZ operators, testing services, and international telecommunications.
As covered in Zero-Rating, Real Rewards: How Exports Can Cut Your VAT Bill, the zero rate is a real advantage for vendors supplying outside South Africa. But SARS will not accept the zero rate unless the paperwork is in order.
What Has Changed in Issue 5
Issue 5 reflects amendments to the VAT Act and adds or updates several supply categories and proof requirements. These are the key changes practitioners need to know.
The "key office bearer" concept is now formally defined. The Note introduces a specific definition: a key office bearer is the head of an organisation's tax function, its public officer, its chief financial officer, or any other similarly designated officer. This matters because throughout Tables A and B, vendors supplying recurring services to non-residents may accept an annual declaration from a key office bearer instead of obtaining a fresh written confirmation for every transaction. This is a practical relief measure for vendors with ongoing cross-border supply arrangements, and it applies across multiple service categories including sections 11(2)(e), (f), (h), (i), (j), (k), (ℓ), (m), (r), (v), and (z).
New categories added to Table A (goods), each with specific documentary proof requirements:
Item S covers the disposal of an enterprise or part of an enterprise as a going concern between separately registered vendors falling within the same legal entity under section 11(1)(p). Required proof includes
A zero-rated tax invoice
The recipient's Notice of Registration, and
A declaration by both the seller and recipient confirming the disposal is a going concern.
Item T covers goods supplied by a vendor to a non-resident for delivery to that non-resident's customer who is a vendor in the Republic, under section 11(1)(q). Required proof includes:
A tax invoice
Written confirmation from the non-resident
A statement from the local customer confirming their VAT registration and intended use, and
Proof of payment from the non-resident.
Items U through Y cover compensation under the Animal Diseases Act, fixed property acquired under land reform legislation, goods in licensed Customs and Excise storage warehouses, and goods supplied by inbound duty-and-tax-free shops. Each has a specific and narrow proof requirement.
Item Z covers sanitary towels under section 11(1)(w). Atax invoice is sufficient.
Item AA covers goods supplied in the course of providing testing services to non-residents under the new section 11(2)(z). These goods are zero-rated under section 11(1)(x). Required proof includes costing or commercial records of consumable goods that became unusable or had no commercial value as a direct result of being used in the testing process.
New items added to Table B (services). The most significant new service categories are:
Item Z covers testing services supplied to non-residents under section 11(2)(z). This is a new zero-rating category. Required proof includes a tax invoice, a copy of the contract confirming the nature of the supply as testing services, written confirmation from the non-resident that they are not a resident and not a vendor, and proof of payment. Depending on whether the goods are exported or remain in the Republic, additional export proof may be required. An annual key office bearer declaration applies to recurring arrangements.
Item AA covers distribution services deemed to be made under section 8(31) for airtime voucher distribution, under the new section 11(2)(zA). Required proof includes records of purchase and selling prices of the airtime vouchers and a copy of the contract with the International Telecommunications Service Provider.
The 90-Day Rule Has Not Changed. But It Still Catches People Out.
The requirement to obtain all documentary proof within 90 days of the earlier of issuing the invoice or receiving payment remains in force. Miss that window, and you must account for output tax on the supply at the standard rate of 15%, reported in Block 12 of your VAT return for the period in which the 90 days expires.
You can recover that output tax later, in Block 18, if you obtain the outstanding documentation within five years of the end of the period in which the original invoice was or should have been issued. But you must be able to show SARS that you initially accounted at the zero rate, filed the return, and properly accounted for the output tax adjustment.
The 90-day rule has specific exceptions for proof of payment. If you have a written agreement for payment beyond 90 days but within 12 months, a contractual retention amount, foreign exchange restrictions affecting the recipient, or a written-off debt, the proof of payment requirement is relaxed, but only for proof of payment, not for the other documentary proof required.
If circumstances beyond your control prevent you from obtaining documentation in time, you can apply for an extension by emailing VATRulings@sars.gov.za before the 90-day period expires. The qualifying circumstances are a natural or human-made disaster, a civil disturbance or disruption in services, or a serious illness or accident affecting the recipient or their authorised representative.
What Practitioners Should Do Now
First, download and read the updated note. It is the reference document. If you handle any zero-rated supplies, it belongs in your practice files.
Second, review your client base for any of the newly added categories. If you have clients involved in testing services for non-residents, airtime distribution, going concern transactions between separately registered entities in the same group, or supplies to non-residents for delivery to local customers, you need to check that the correct proof is being obtained and retained.
Third, update your document checklists. If you use a standard zero-rating proof checklist for export clients, add the new categories and the key office bearer annual declaration option for recurring service arrangements.
Fourth, check your 90-day tracking. If any zero-rated supply is approaching the 90-day mark without a full document set, act now, not after the deadline.
For more on the conditions for zero-rating services to non-residents, see Zero-Rating, Real Rewards: How Exports Can Cut Your VAT Bill. For the going concern VAT conditions, see VAT Implications on the Sale of Property by a Liquidated Entity for a practical worked example of what happens when those conditions are not met.