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If they can't pay VAT in SA like every other company here, then they can go ahead and refuse to do business with us.
They don't deserve special treatment
Oh it is surely in reaction to the growing e-market. It would be foolish for any government to ignore it. I however think it's just natural progression - government being ten years behind the industry with legislation. I don't think there is an ulterior motive beyond there being services rendered without VAT out there.
I thought VAT was a consumption tax. You get taxed for buying stuff and if you add value to what you have bought and then onsell it then you claim back the tax. Yes/No?
Okay, but what duties are imposed on online purchases? Since the sale happens 'locally' I'm not importing anything, but data over a cable - just as I do by just browsing the web - so why shouldn't 'local' taxation be enforced?f consumers choose to import form them, then that is their prerogative and government will get their duties imposed.
OK, well I can see how sitting on a dust pile might be fun for you... you are only aware of Apple Stuff.
But to the rest of us that are aware of everything else in the world, we would like to have access to content... preferably legally and preferably cheap.
Okay, but what duties are imposed on online purchases? Since the sale happens 'locally' I'm not importing anything, but data over a cable - just as I do by just browsing the web - so why shouldn't 'local' taxation be enforced?
I want to see how this will be implemented. In the US for example, online sales tax is only applicable if the company is incorporated in a state where online sales tax can be collected. You will therefore find that the majority of online businesses are incorporated in Delaware (or similar states) where online sales tax is not applicable. The same applies to Europe where most online businesses incorporate in tax havens such as Gibraltar, Cyprus, Luxemburg.
The EU is different whereas each Euorpean country has it's on VAT rate (i.e. UK 17,5%, Germany 19% or Austria 20%). Depending on the country in the EU there are certain VAT thresholds - so for example Austria's VAT threshold is EUR 100,000. This means that if I have a company in Austria, I will charge 20% VAT on sales until my foreign sales reach EUR 100,000 after which I would for example charge 17,5% VAT for UK sales and 19% VAT for sales to Germany.
VAT is really the preferred method of collecting tax, as there is an incentive to claim VAT back on your inputs (whereas with sales tax it's a tax you just have to pay over). I think charging VAT to overseas company will give a huge boost to online retail in South Africa. Most online retails position themselves so that they do not have to charge VAT/sales tax and therefore provide better pricing. The enforcement of VAT will either probably mean a price change with online retailers.
It will be short of a miracle if SA is able to implement this. Our biggest problem is that 150,000 (2.3%) tax-payers contribute 31% of tax-revenue and 3m (47.4%) contribute 5.6% to tax-revenue. Quite shocking to see that over 8m are not paying taxes (income too low - http://www.moneywebtax.co.za/moneywebtax/view/moneywebtax/en/page1504?oid=75795&sn=Detail&pid=1504)
Sales Taxes in the US are based on the location of the customer
Yeah....the same hurdles they face in Germany, France, Italy etc.
Must be tough on them