SA digital tax coming in April

akescpt

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educational services as well I see. not everybody can get a nice fat tender. some people need to study. baastids. more in the trough for them though!
 

AlmightyBender

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How exactly are they going to collect the VAT from all of these foreign firms?

What I see happening is nobody willing to offer online services or good to South Africa due to the schlep of registering for VAT with SARS. Epic fail.
 

Fulcrum29

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My problem is not the indirect tax as what it is, but the 14% increase and how the audits are going to be done.

  1. Hosting services
  2. Email (collaborative services)
  3. IaaS
  4. SaaS
  5. VoIP
  6. Etc.
This is expensive in SA, no matter how large your organisation, it can be argued to be a 14% overhead increase. How are the “export countries” going to implement this?

Global competition…
 

Solitude

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I see places like Steam dropping support for South Africa. If I lose my Steam library I swear there will be hell to pay.
 

Fulcrum29

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I see places like Steam dropping support for South Africa. If I lose my Steam library I swear there will be hell to pay.

I get the general idea that “export countries” without registered entities in SA won’t comply, they don’t need to, the onus will probably come back to the consumer, thanks to our amazing government decision making board.

As I’m against eliminating choice due to external sources, I’m against this indirect tax.
 

TheGrimReaperUH

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HAHAHA and how are they gonna enforce this? Seriously they are trying to take money from us by whatever means.... First the e-toll which looks to be a disaster, now that that has failed they wanna charge us for this HAHAHAHA I can see anonymous is possibly gonna set an attack about this... But we shall see.


EDIT: Mind you as our favorite hero mnr juju said he was gonna shut down twitter last year so we shall see.
 
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Paul Hjul

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Actually its very easy to get high degrees of compliance with minimal cost and effort and if SARS has things properly in place. It boils down to getting services that are charged for abroad to fill out the additional paper work to claim back various taxes from the exporting country and paying over money to SARS.

Microsoft, Google and Apple are already fully on board - it simply makes more sense for them to comply than not to.

At the moment we buy Microsoft download products through Ireland because of its export friendly position within the EU but IFAIK we are actually paying 17% VAT. Now if compliance makes setting up shop in some form here and using a 14% VAT base which serves the region its a big win.

This sort of thing is already done on high value service contracts in legal, financial and management service industries. And in fact VAT arbitrage is something which some firms really do use for tax exporting

What is going to be an issue is if SARS starts to be bullies on little businesses and adopting an attitude of making the purchaser rather than the vendor liable civil and criminally. There is a potential problem in the importing of digital goods and services that when you import goods privately we can quite easily implement thresholds and have a "nothing to declare" issue at our airports with a change of responsibility for VAT moving from the vendor to the person bringing the goods in.

Interestingly SARS and thedti have completely different attitudes towards imports and take a look at the Business Licensing Bill to get a wiff of the protectionist alternatives.
 

bekdik

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@Mod: Please can this thread be combine with the other one?
 

Fulcrum29

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Actually its very easy to get high degrees of compliance with minimal cost and effort and if SARS has things properly in place. It boils down to getting services that are charged for abroad to fill out the additional paper work to claim back various taxes from the exporting country and paying over money to SARS.

Microsoft, Google and Apple are already fully on board - it simply makes more sense for them to comply than not to.

At the moment we buy Microsoft download products through Ireland because of its export friendly position within the EU but IFAIK we are actually paying 17% VAT. Now if compliance makes setting up shop in some form here and using a 14% VAT base which serves the region its a big win.


This sort of thing is already done on high value service contracts in legal, financial and management service industries. And in fact VAT arbitrage is something which some firms really do use for tax exporting

What is going to be an issue is if SARS starts to be bullies on little businesses and adopting an attitude of making the purchaser rather than the vendor liable civil and criminally. There is a potential problem in the importing of digital goods and services that when you import goods privately we can quite easily implement thresholds and have a "nothing to declare" issue at our airports with a change of responsibility for VAT moving from the vendor to the person bringing the goods in.

Interestingly SARS and thedti have completely different attitudes towards imports and take a look at the Business Licensing Bill to get a wiff of the protectionist alternatives.

Interesting to see this contributor's view on the matter:

http://www.forbes.com/sites/timwors...in-twitter-apple-uncle-tom-cobbleigh-and-all/

However the content we purchase in Ireland is also available in Ireland. It is probably only Adobe when it comes to the larger digital media distributers who got their content locked up in USA, where only USA and Canadian citizens (entities) have access.

I have seen no announcement made by MS and Google that they will make their services and digital distribution channels available in SA anytime soon, neither any communication in line with this through their partnership channels.

There is an abundance in digital content suppliers, providing the payment and content gateways to various large and small application or digital service developers. This can nearly be implied a tax on a tax on another tax.

I really want to see this tax being implemented within the on-demand services structure.

The only other way is to look at our own distribution lines, where the distributors act as agents where tax is already implemented, like MS with their licences (except volume licencing agreements).
 

Paul Hjul

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I specifically mentioned Microsoft, Google and Apple because I recall the three being mentioned in an article about the companies responding to criticisms of tax avoidance and the issue of VAT on services.

The VAT situation is a little different from the Double Irish mentioned in the article or the Dutch Sandwich (which turn on income tax). I am in general agreement with the link but it is missing an important addition to the dynamic of tax exporting.

Basically if there is a situation where the tax is not refunded on export then we are going to be double and triple taxed - but this is already the case with VAT in general - which is why VAT vendors are pretty good at keeping their invoices recorded.

The location of Ireland is because of the double Irish but the consequences on VAT which is where we are affected is that we are paying the Irish fiscus. Personally I'd rather pay the South African fiscus

The possibility of an SEZ where digital content and service sales presents itself for SA as an opportunity but thedti is likely to be a problem rather than SARS.
Basically declare an SEZ where enterprises can establish a presence where the only tax payable is the 14% VAT that automatically accrues and allow for sales to other jurisdictions to be processed with the requisite outpay etc ...
 

Fulcrum29

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@ Paul, I do agree with you.

Seeing these developments happening and with PoPI, taking in regard where everything is stored at this stage. Local banking and local CDN’s can be a viable solution, but at the export entity’s expense. Yes, rather pay SA the 14% as a citizen than the Irish.
 

Paul Hjul

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well if PoPI can work and there is a big recognition from government of letting the services work it could be good

(also Standard Bank are sitting with a what 2 billion rand data centre that is in want of purpose)

Unfortunately with the exception of the SEZ Bill almost everything I have seen from thedti in the last 4 years suggests an opposite approach.
 

Paul Hjul

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So, in layman's terms: what would the effect of this newly-applied tax have on consumers?

depending on how it is implemented it could mean some services will be cheaper (paying a lower VAT rate) but in most cases means the SA government takes more of your money

the problem is if they go into a coercion cycle to extract this money. I need to have a really good look at the proposed regulations but my fear is with thedti rather than SARS (as is usually the case)
 

Maverick Jester

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depending on how it is implemented it could mean some services will be cheaper (paying a lower VAT rate) but in most cases means the SA government takes more of your money

the problem is if they go into a coercion cycle to extract this money. I need to have a really good look at the proposed regulations but my fear is with thedti rather than SARS (as is usually the case)

OK, that is more or less how I understood this. Thanks Paul.

To clarify- is this effectively ensuring that these retailers pay the SA government as opposed to the exporting government?
 
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