A new Binding General Ruling says you could owe SARS Vat without even knowing it!
Do you make use of imported electronic services?
For example, do you:
• Outsource your website development;
• Purchase eBooks, videos, games, films;
• Make use of IT service etc., from a foreign company?
If you do, you're making use of imported electronic services and you need to know about the recent change in the Vat Act.
Previously, you never had to pay Vat if you imported electronic services that weren't part of your taxable supplies. But now SARS has made a change to the Vat Act.
As of 1 April 2015, SARS issued a binding general ruling that you must now pay Vat on electronic services you import. And it doesn't matter if these services are part of your taxable supplies or not.
Read on as I explain why SARS issued this binding general ruling and what it means for you...
Are there any inaccuracies in your Vat invoices? You may be charged a very high penalty!
The truth is brutal! Even if it wasn't you who made the mistake, it may be you who'll bear the consequences.
If SARS has found inaccuracies, you will be assessed, held liable to penalties and interest and possibly even additional tax! You may even be prosecuted!
Read on to find out how you can make sure your tax invoices 100% correct...
Why SARS issued this Binding General Ruling
When you import goods into South Africa, they pass through SARS Customs division where they collect Vat.
But Customs can't collect Vat when you import services over the internet. So SARS says you have to pay it over.
Here's what your foreign supplier must do to comply with this binding general ruling.
· Register for Vat if he supplies you with electronic services worth more than R50 000 in any 12 month period;
· Charge you Vat on the services; and
· Give you a valid tax invoice.
Read on for the consequences of non-compliance.
SARS issues TWO MILLION Vat review letters a year
That's the letter that pops up immediately after your submit your Vat returns. The same letter that has seen people around the country wake up to thinned out bank balances.
Now get this: There are only 700 000 vendors registered with SARS…
You do the math.
Every vendor should receive this letter at least once a year.
Here's how to protect your bank account before you do…
Take note if your foreign supplier doesn't register for Vat
If your foreign electronic services supplier doesn't register for Vat, it means you'll have to pay over the Vat on your importation!
You must complete a VAT215 form and pay the Vat to SARS within 30 days of paying him.
If you don't, you know SARS will come after you for that money as soon as it learns about it. And it will charge you with backdated penalties and fines from the 30th day after you made the payment.
And, if that's not bad enough, you'll miss out on all your related input tax deductions.
Don't let this happen to you, make sure you're paying Vat on your imported electronic services.
P.S. Are you sure you know when you should levy your imports and exports as zero-rated, or exempt supplies? A simple mistake could cost you thousands of Rands. Don't be a victim, here's one simple tool you can use to be 100% certain and avoid all this.
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