South Africa plans to implement madatory VAT registration for foreign businesses selling digital products to SA clients

South African National Treasury has proposed that foreign businesses, which sell digital products to South African customers, be required to register for VAT purposes in South Africa.

The VAT implications of digital product sales, including books and music sold via the internet by suppliers who are neither resident nor established in South Africa, have caused uncertainties and resulted in VAT compliance risks for these foreign businesses.

For your convenience has therefore the National Treasury proposed in the 2013 Budget Review (which was released on 27 February 2013), that foreign businesses supplying ebooks, music and other digital goods and services in South Africa be required to register as VAT vendors.

While no further details are known at the moment, we assume that this will relate to sales to South African domiciled persons and companies not registered for VAT. The date of the planned implementation of the new rules is also not available yet; they might become effective as soon as 2014 or 2015.

Find more about this issue here.

What does this mean for you?

If you are selling eservices to customers in South Africa we suggest you to monitor this development. We will provide additional information when they become available.