VAT on electronic services (inc cloud and software): what you need to know - The VAT has always been payable by the buyer but the duty to register by the seller is the new requirement
National treasury recently published an amended regulation for electronic services, in line with the proposal by the minister of finance in the budget review of 2017. They stated that the VAT base for electronic services would be expanded.
The amended regulation has an effective date of 1 April 2019. International suppliers of services to South African customers must evaluate whether their supply of services qualify as electronic services, and whether this would create a liability to register for VAT in South Africa.
The impact of the amended regulation is that all services that are supplied from abroad by an “electronic agent”, “electronic communication” or the “Internet” are now electronic services for the purposes of VAT.
The reach of the new regulation is staggering and may also include the supply of the following services: software subscription services; the use of software by an entity in South Africa provided electronically by its holding company situated abroad (unless the exclusion applies); broadcasting; cloud computing; advertising services; gaming; and any reservation services made via an online platform.
It is worth noting that the current VAT Act places the duty on the South African buyer/import to declare and pay their VAT even when buying an ebook. In reality, this has not happened hence the new amendment. All hardware goods have anyway been taxed and had VAT paid when importing through customs.
|VAT on electronic services: what you need to know - TechCentral