South Africa: VAT registration of foreign ecommerce service suppliers as of 1 January 2014

As of 1 January 2o14 all non-South African suppliers of ecommerce services will be required to register as VAT vendors in South Africa and account for output VAT on its supplies to South African residents.

E-commerce services are defined in the South African VAT Act to include any supply of services where the placing of the order and delivery of the service is made electronically.

The VAT registration requirement for a non-resident supplier of ecommerce services is triggered by either the supply of such services to a South African resident recipients (either B2B or B2C) or where payment is affected from a South African registered bank.

The level of supplies made by the non-resident in South Africa is irrelevant, meaning that there is no minimal turnover threshold and the obligation to VAT register arises from the very first South African Rand generated with e-service to SA based clients.

You can find some more information here and download the flyer prepared by PwC South Africa here.

What does it mean for you?

Companies providing e-services to SA clients must register as a VAT vendors and submit VAT returns in South Africa. In addition, South African VAT must be accounted for on the payments/cash basis and a corresponding VAT compliant invoice must be issued for each supply.

If your business is affected by these rules relating to e-services, please make sure that your company will implement them in due time, keeping in mind that non-resident businesses affected by the amendments must position themselves to comply with the new registration and compliance requirements as of January 2014.