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National Treasury publishes amendments to the Vat Act! Here are the implications for foreign electronic service providers

by , 03 April 2014
National Treasury has finally published its 'Electronic Services Regulations' in the Government Gazette. The amendments to the Vat Act relate to how electronic service providers will be taxed. Read on to find out how these changes affect you, so you can get in line with the new regulations before they commence in June.

Here's what you need to know about the recently published Vat Act amendments regarding foreign electronic service providers

On the 28th of March 2014, Finance Minister Pravin Gordhan published the new Vat regulations regarding foreign electronic service providers.

My Broadband says the regulations aim to introduce South Africa's 14% Vat on all digital goods and services, even those bought from foreign companies.

According to a report by HumanIPO, the treasury says the amendment isn't a new tax, it's a change in the 'tax liability from the importer of the service to the foreign supplier to address concerns about non-compliance in terms of the current rules'.

In the report, the treasury says it has introduced the changes because 'there's a need to modernise current governmental processes to better incorporate technological innovations in the electronic services sector and to ensure that South Africa keeps abreast with international developments in this area, and is competitive.'

When will the new regulations be implemented?


Any person who is liable to register for Vat but fails to do so is guilty of an offence and may be liable to a fine or two years imprisonment.

Don't get caught out!


The implementation of the these Vat regulations has been set for the 1st of June 2014

The treasury says it's set the June date to allow businesses sufficient time to get their systems ready. However, SARS will start registering foreign electronic service providers from April 7 (that's next week Monday).

Last month, we reported that SARS says the registration process for foreign electronic service providers will be undertaken by a single, centralised unit. Applications will be processed within 72 hours of receipt. And notice that applications have been successful will be made by e-mail.

Checkout our article as we explain the whole registration processes for foreign electronic service providers.

The important thing here is that the new rules regarding how you'll be taxed as a foreign electronic service provider will kick in on the 1st of June. This means you must sort out everything regarding registration before that date to avoid steep penalties. Remember, ignorance isn't an excuse when it comes to SARS.

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David Hutchinson 2014-04-10 10:55:44

Good morning
Our South African vat and customs registered company will be starting and registering new business in Zambia within their EPZ zone in Zambia.
However, we require capital equipment from suppliers within South Africa to be used by our processing business in Zambia. As well as the transportation of this same equipment from South Africa to Zambia.
In regards to VAT invoices from South African suppliers of both equipment and soft services what are the invoice requirements for all goods and services provided to our Zambian based factory from South African suppliers.
Best regards and thank you.
David Hutchinson.

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