HomeHome SearchSearch MenuMenu Our productsOur products

Taxes on imported electronic services: The new rules that apply in 2015

by , 10 June 2015
You probably already know that SARS set out new rules for Vat treatment of imported electronic services. They came into effect on 1 April 2015.

Today we'll look at these rules so you can make sure you don't miss out on your input tax deductions.

So let's assume your supplier needs to issue you with a credit or debit note. He can only do this if he first gave you a valid tax invoice.

This means that then he can issue a credit or debit note with the following information:

1. His company's name, address and Vat registration number;
2. Your name and address as the recipient of the electronic services;
3. The date he issues the credit or debit note;
4. A brief explanation of the circumstances giving rise to the credit or debit note.
5. The new consideration amount whether it's increased or decreased. And the tax amount. If the consideration is in:

• Rands, the tax invoice must show the new Vat amount. Or it must have a statement that the consideration includes the new Vat amount and the rate the Vat was charged; or
• Any other currency, the tax invoice must show the new amount of tax in Rands. Or your supplier must give you a separate document, also showing the new amount of tax in Rands; and

 *********** Recommended For You ***************

Getting your VAT refund from SARS just got harder…

A small administrative mistake is all it takes for SARS to have the right to withhold your refund.
Put a simple zero in the wrong place on the new VAT return could and you can forget about getting even a cent of your money back.

Make sure this never happens to you by filling in the new VAT return 100% correctly every, single time.

I'll show you how here.

6. The exchange rate used, which must be the same as the rate used in the tax invoice (Section 21(5) of the Vat Act).

Pay attention to the fact that if your supplier's credit note doesn't meet these criteria, SARS will disregard it completely. It will see it as if the credit note doesn't exist. This means the Vat on the tax invoice will become payable to SARS.

The exchange rate and value of supply is important too

If your supplier gives you a tax invoice or a credit/debit note in a currency other than Rands, he must convert the tax charged to Rands.

The exchange rate he must use to work out the tax charged in Rands, is the rate published by either:

• The South African Reserve Bank at www.resbank.co.za/Research/Rates/Pages/SelectedHistoricalExchangeAndInterestRates.aspx;
• Bloomberg at www.bloomberg.com/markets/currencies/cross-rates;
• The European Central Bank at www.ecb.europa.eu/stats/exchange/eurofxref/html/index.en.html.

He must use the exchange rate on the date the time of supply occurs. Or the monthly average rate for the month that the time of supply occurs.

The time of supply is the first of either:
• The issue of the invoice; or
• The supply of services whichever takes place first.

Also, pay attention to the fact that if your supplier doesn't follow these rules, SARS may see your tax invoice as invalid and disallow your input tax claim. And it will charge you fines and penalties for trying to claim input tax without valid documentation.

Related articles

Related articles

Related Products

Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance

Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today

Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism

This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands

Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>