South Africa – New Electronic Services Tax postponed till June 1st – Materials and recording of PwC Webcast of 25 March 2014

Following our previous post, you can now access the recorded version of our Webcast on South Africa’s plans to apply 14% VAT on all electronic services, even those bought from foreign businesses.

On 28 March the South African National Treasury published its “Electronic Services Regulations” in the Government Gazette and released a media statement, announcing a postponement of the effective date till June 1st, 2014.

The changes will make it compulsory for foreign e-commerce suppliers of electronic books, music and other digital services to register for VAT in South Africa.

The implementation date has been delayed with 2 months till June 1st, to give businesses more time to get their systems ready.

The Regulation provides guidance on what is meant by the definition of “electronic services” for VAT purposes in South Africa.

The most notable amendment to the draft regulation is the exclusion of:

1. “information system services”;

2. maintenance services; and

3. software.

The draft Binding General Ruling (“BGR”) relating to electronic services was also released on Friday. The due date for comment is 31 May 2014.

This BGR sets out:

• the information that must be contained in a document in order for that document to qualify as a tax invoice; and

• the manner in which prices must be advertised or quoted,

for the supply of electronic services by an electronic services supplier.

We will be hosting another webcast in the next couple of days. Please stay tuned for more information in this regard.

About Sophie Claessens

Senior Tax Manager PricewaterhouseCoopers Tax Consultants Belgium email: Mobile: +32 473 91 05 67 Office: +32 3 259 3169

Sophie Claessens is an international VAT advisor, based in Antwerp, Belgium, with a particular focus on business-to-consumer industries, including telecommunications, media, internet and e-commerce. She supports major industry players on sector-specific issues, including VAT compliance at both an operations and strategic level, and is directly involved in policy work for businesses in these industries, both at the Belgian level and at the level of the European Commission. She is responsible for indirect taxes in the communications sector at PwC Belgium and is a driver of PwC's Business Working Group on the EU 2015 VAT changes. She has authored articles for publication in Belgian and international tax journals.