South Africa imposes VAT on foreign electronic B2C e-services in 2014
- 12 July 2013 | Richard Asquith
The South African government has brought forward a new Bill to introduce a requirement for non-resident providers of electronic services to register for South African VAT.
The Bill will be enacted before year end, and will come into force on 1 January 2014. It will oblige foreign web site owners selling electronic services (streaming video, music etc) to South African consumers to register with the South African Revenue Service, and to charge and collect local VAT at 14%. There is no registration threshold, meaning the first sale would require a South African VAT registration. The tax liability will be triggered if the consumer is located in South Africa, or the settlement of the invoice is made from a South African bank.
The change in legislation follows a ruling earlier this year following a review of Microsoft in Ireland providing IT VAT-free IT services to South Africans.