Finance Minister Pravin Gordhan has proposed imposing Vat on foreign businesses who sell digital products and services, explains MyBroadband
That's because governments are losing out on large amounts of Vat when you consider well-known online brands like iTunes, Amazon and eBay.
But if you're a smaller business selling a digital product online, like podcasts for a monthly fee or PDF downloads, you'll also be affected.
'It is a profit issue at the end of the day. Vat at 14% in South Africa is a material number in your profits so online businesses will pass that on to consumers', adds MyBroadband
All fair and well, but this is causing confusion among Vat-vendors in terms of how to register your business for Vat if you operate over the internet, says FSP Business
Will you need to pay more Vat to SARS for digital product sales?
All you'll need to do is make sure you've registered for Vat in the country where the consumer resides.
So if you only make online sales locally as you sell a 'South Africa' specific product, you won't need to worry.
But if you've set up a company website, pay attention!
Company websites are considered as marketing expenditure, so you can claim input tax on the invoice for setting it up as long as your supplier is a Vat vendor, explains the Practical Vat Loose Leaf.
You can even claim input tax on driving people to your website through vehicles like banner ads and Google PPC, says FSP Business
Keep your Vat records in digital format too!
Remember that SARS will also accept electronic invoices you issue and receive, says FSP Business.
All the more reason to take your business digital!