DISTRIBUTION:  GENERAL
DATE:                  9TH SEPTEMBER, 2008
SUBJECT:    Guidelines for Zero Rating of Exports by Registered Persons through an Agent 

1. Exportation of goods and taxable services is zero rated by virtue of section 8 and the Fifth Schedule to the Value Added Tax Act.
2. Under the Fifth Schedule paragraph 1, where exportation of goods and taxable services take place in the cause of a registered person’s business, they shall be zero rated subject to the satisfaction of the Commissioner.
3. Regulation 10 provides for the documents to be maintained in order for an export supply to be zero rated.
4. The proof required under regulation 10 seems to imply a direct exportation.
5. Registered persons are at times required to export through other persons in order to enjoy economies of scale or due to the nature of their business. This has caused varied interpretations within the Department and among the taxpayers. In order to provide uniform treatment on exports through agents the Commissioner wishes to issue the following guidelines:-

(a) Exportation of goods by a registered person through an agent shall be zero rated if the following conditions are fulfilled:-

• There shall be a valid contract between the registered person and the agent setting out the relationship between the two parties.
• The contract should spell out the role of the third party, which is the facilitation of the export.
• The registered person must obtain and maintain for inspection valid commercial and official export documents which should include-

The export entry form duly certified at the point of exit.

Commercial evidence in the form of customer’s order, sales contract, inter-company correspondences, copy of export invoice, advice note, consignment note, packing list, insurance and freight charges, evidence of payment and receipt of goods abroad.

(b) zero rating will not be available to the registered person where the goods are exported by the agent and both the exportation and commercial documents bear the name of the “agent”.

The above guidelines are intended to guide on the operations. They can be amended without notice but taxpayers and staff will be informed accordingly.

COMMISSIONER OF DOMESTIC TAXES