Tag Archives: South Africa

South Africa: Further news about the planned VAT taxation of eservices (B2B and B2C)

As reported there is new draft VAT legislation in South Africa, which is planned to be implemented in early 2014, which targets electronically supplied services provided by foreign (non-established) business to customers located in South Africa.

Whilst most of us are familiar with the rules and administrative practices which operate within the EU and Switzerland/Norway regarding the supply of such services by non-established businesses to private customers (B2C), it is important to recognize that South African VAT legislation does not currently distinguish as between B2B supplies and B2C supplies and refers generically to “imported services”. Thus whilst the intended “target” may well be the B2C sector it appears that the B2B sector may be equally impacted due to the absence of the distinction referred to above.

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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.

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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.

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