National Treasury amends regulations for electronix

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Seomofo.com

The National Treasury has published an amended regulation for electronic services. The regulation has an effective date of 1 April 2019. It will impact international suppliers of services to South African customers, who must now evaluate whether their supply of services qualifies as ‘electronic services’ and whether this will 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, says VAT expert Baker & McKenzie.

The new regulation is staggering and may 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
  • Any reservation services made via an online platform, etc.

VAT expert at Baker & McKenzie, said that the regulations will likely lead to companies such as Netflix, Facebook and Google having to register for VAT.  He added the “The customer would ultimately bear the value-added tax in the form of higher prices as VAT is – in economic parlance – a consumption tax.”

Tech Spective

The VAT experts warned that all foreign businesses that supply electronic services in South Africa should now determine if their services are supplied by means of an electronic agent, electronic communication or via the internet.

According to Baker & McKenzie “Failure to register for VAT in a timeous manner may have a huge financial impact for these foreign service providers, as SARS would levy penalties and interest and this may also lead to reputational damage.

Read more : Business Tech 

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Matshepo is a Junior Journalist at OStudio Post.

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