South African VAT on e-services
In June 2014, South Africa made income earned by non-resident providers of electronic services to consumers liable to Value Added Tax. This was extended from 1 April 2019 to B2B services provided to South African businesses by foreign providers.
Electronic services liable to South African VAT
South Africa includes the following services in its definition of e-services:
- Online gaming and games of change
- Internet-based auctions
- Online journals, blogs, newspapers, social media, webcasts, apps and web services
- Online media, music, e-books and images
- Education, excluding those services provided and regulated by the education authorities
Determining if a transaction is taxable in South Africa
The place of supply rules for South African e-services are based on the whether the recipient is resident in South Africa, and if the consideration is settled (bank account or credit card) from the country.
Foreign providers must VAT register if their South African income exceeds ZAR 1million per annum on a rolling calendar basis. Businesses seeking a registration are not required to appoint a fiscal representative; which is required in most other foreign registrations. Similarly, with a local bank account – this is not required for e-service providers.
South African returns must be submitted on a monthly basis; occasionally bi-monthly returns are permitted. Providers are also required to produce VAT invoices for customers, including details of the vendor, customer, services, consideration and VAT calculation.
South Africa requires B2B non-resident providers of e-services to charge VAT on their business sales and therefore register for VAT. This is unlike most other countries which generally permit zero-rating and the use of the reverse charge.