n Business Tax and Company Law Quarterly - The South African VAT implications for foreign suppliers of electronic services

Volume 5, Issue 1
  • ISSN : 2219-1585


The supply of digital products by non-resident suppliers to resident consumers has been problematic for a number of years. Notwithstanding that such supplies would fall to be taxed in South Africa where the digital products (a 'service' for VAT purposes) are used or utilised in South Africa otherwise than for the purpose of making taxable supplies, as such services would constitute 'imported services', compliance was practically non-existent. In response to this non-compliance, the VAT Act has been amended to require non-residents who supply 'electronic services' to residents in South Africa to register as vendors for South African VAT purposes. 'Electronic services' are defined by reference to electronic services as prescribed in a regulation issued by the Minister of Finance. A draft regulation has been issued prescribing a significant number of such services. This article highlights the developments in the EU and OECD in this regard, as well as some of the issues that will arise once the new regime becomes effective.

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