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South Africa
South Africa
Explore the requirements and rules that apply to electronically supplied services in South Africa.
Supplies of e-services to consumers (B2C)
Is a non-resident supplier of e-services to consumers located in this country obliged to register and/or account for local VAT/GST on such supplies in this country?
Yes, (see additional comments below).
If there is no current requirement, is there any anticipated change to that position?
Requirement is already in place.
Is an invoice compliant with the VAT/GST law in the customer's country required?
Yes, an electronic services supplier must issue a tax invoice for a supply of electronic services containing minimum information.
Supplies of e-services to businesses (B2B)
Is a non-resident supplier of e-services to business customers located in this country obliged to register and/or account for local VAT/GST on such supplies in this country?
Yes, for both B2C and B2B supplies, the South African VAT Act requires a person to register for VAT if the person carries on an enterprise and in the course of furtherance thereof, makes taxable supplies exceeding a threshold (of 50,000 South African rand (ZAR) in the case of electronic services).
The definition of enterprise in the VAT Act includes:
The supply of electronic services by a person from a place outside South Africa where at least two of the following circumstances are present:
- The recipient of the electronic services is a resident of South Africa;
- Any payment to that person in respect of such electronic services originates from a bank registered or authorized in terms of the Banks Act; and
- The recipient of those electronic services has a business address, residential address or postal address in South Africa.
Electronic services as envisaged above, are set out in a separate regulation.
If there is no current requirement, is there any anticipated change to that position?
Requirement is already in place.
If there is not a requirement for the non-resident supplier to register for VAT/GST, are the services subject to VAT/GST withholding by the customer?
Not applicable
Where there is a current or future requirement for non-resident suppliers to register and/or account for local VAT/GST or a customer VAT withholding requirement:
When did/will that requirement come into effect?
1 June 2014
What is the applicable annual turnover threshold (in local currency) for that requirement to apply?
50,000 South African rand (ZAR)
Is simplified or standard registration required?
Standard. Deductions of input tax would be limited to instances where the non-resident vendor was charged South African VAT at 14% on the acquisition of goods or services for purposes of making electronic services supplied to a recipient in South Africa.
Does the requirement apply to all e-services?
No, "electronic services" which are subject to these VAT rules are specifically listed in Government Notice R221. Other forms of e-services do not fall within these rules.
Contacts
Dermot Gaffney
Partner
T +27 82 686 9345
E Dermot.Gaffney@kpmg.co.za
