VAT on digital goods and services in SA from April: Treasury

Praemon

Expert Member
Joined
Jan 11, 2007
Messages
1,474
Not sure if anyone has posted this yet, but it popped up on SABC's YouTube channel yesterday. The guy being interviewed is a real... "class act".

[video=youtube;Afbm01bS0Mo]http://www.youtube.com/watch?v=Afbm01bS0Mo[/video]
 

DJ...

Banned
Joined
Jan 24, 2007
Messages
70,287
He might be labelled as a copyright lawyer (he must be a tax expert, right? :rolleyes: ) but a better label would have been "communist, or socialist - I don't care).

What a fscking moron. He's just scaremongering with references to teachers and other professions, and half of his drivl isn't even relevant.

And when asked how it will be adopted, he says "technology" and moves on. They couldn't actually secure a proper expert in the field who knows what he's talking about? Or was this bloke cherry-picked?
 

MagicDude4Eva

Banned
Joined
Apr 2, 2008
Messages
6,479
I don't know how treasury managed to do this, but this is the email we just received:

As of April 1st, 2014, Atlassian will begin collecting Valued Added Tax (VAT) from all customers based in South Africa, in accordance with recent changes to South African tax legislation on electronic services.
All customers should update their address prior to purchasing an Atlassian product to ensure that South African VAT is correctly calculated on your open quote or invoice.
 

Sonic2k

Executive Member
Joined
Feb 7, 2011
Messages
7,641
Just so that you know, Kobo has sent us a similar notification, I tried to buy a few books before the deadline and all of my purchases did not go through.

I also got a notification that all my XBOX points were converted to a Rand amount!

Honestly, Is the cANCer not content with stealing from us to the extreme? Do they want even more from us. Killing the goose that laid the golden egg is what this is!
 

MagicDude4Eva

Banned
Joined
Apr 2, 2008
Messages
6,479
Just so that you know, Kobo has sent us a similar notification, I tried to buy a few books before the deadline and all of my purchases did not go through.

I also got a notification that all my XBOX points were converted to a Rand amount!

Honestly, Is the cANCer not content with stealing from us to the extreme? Do they want even more from us. Killing the goose that laid the golden egg is what this is!

I thought that the bill was published for comment and have not seen any updates that it has actually been accepted. Having said that, I guess many people will now just use pre-paid cards for international services. This is really messy as in the end it will affect even international hosting, DNS services etc. Would have no issue with it, if the "valued-added-tax" would actually add value to this country and not go into corrupt government institutions.

A sensible cause would be to offset collected VAT for digital goods to the improvement of the digital landscape in this country.
 

Messugga

Honorary Master
Joined
Sep 4, 2007
Messages
11,963
A sensible cause would be to offset collected VAT for digital goods to the improvement of the digital landscape in this country.

A sensible cause, definitely, but that's also just about the definition of wishful thinking. This is nothing but another vehicle for the lining of government pockets.
 

MagicDude4Eva

Banned
Joined
Apr 2, 2008
Messages
6,479
I wrote a blog on this in Feb, my question is how many international providers will sign up to pay Vat or will they just start excluding South African companies and put us back into the dark ages?

I have not read the legislation and leave the inner workings to the financial gurus. For me the main question is how international companies (charging in foreign currencies) will charge VAT (i.e. they could only charge VAT on the USD price and then transfer the VAT portion at whatever exchange rate via forex-transfer to treasury). Not quite sure how non-SA company and SARS will handle the exchange rate fluctuation. Technically the non-SA company would have to keep record of the exchange rate when the transaction occurred and based on that issue a tax-invoice. I still see that this will cause problems.

Even more interesting will be the scenario, where a number of local companies resell overseas services (think hosting, SMS gateways etc) - so their overseas ISP will now charge VAT and their cost will go up by 14%.
 

MKFrost

Expert Member
Joined
Oct 23, 2012
Messages
3,837
And when asked how it will be adopted, he says "technology" and moves on. They couldn't actually secure a proper expert in the field who knows what he's talking about? Or was this bloke cherry-picked?

He wears a baseball cap and its on skew. According to SABC standards that makes him a technology expert.

Seriously though, is this what the government meant when they said they are going to widen the tax base....
 

Domains.co.za (Wayne)

Domains.co.za representative
Company Rep
Joined
Mar 27, 2013
Messages
246
I have not read the legislation and leave the inner workings to the financial gurus. For me the main question is how international companies (charging in foreign currencies) will charge VAT (i.e. they could only charge VAT on the USD price and then transfer the VAT portion at whatever exchange rate via forex-transfer to treasury). Not quite sure how non-SA company and SARS will handle the exchange rate fluctuation. Technically the non-SA company would have to keep record of the exchange rate when the transaction occurred and based on that issue a tax-invoice. I still see that this will cause problems.

Even more interesting will be the scenario, where a number of local companies resell overseas services (think hosting, SMS gateways etc) - so their overseas ISP will now charge VAT and their cost will go up by 14%.

@MagicDude4Eva, could not agree with you more.
 

MagicDude4Eva

Banned
Joined
Apr 2, 2008
Messages
6,479
@MagicDude4Eva, could not agree with you more.

I have gone straight to the supplier and asked for clarifications and have posted the following questions to them (if anyone has any other, please PM me and I will add to it):
- Will you issue a South African compliant tax-invoice?
- Will the invoice be in Rand or USD?
- How will you deal with the exchange rate fluctuations (i.e. the exchange rate applied to my credit card order will differ from your tax invoice and from your VAT amount which you submit to SA revenue service)
- How will collected VAT be paid to South African treasury?
- Where did you receive advice that the tax legislation has been officially changed?
- Why bother complying with South African tax legislation?

I would be curious if anyone else has received similar notifications.
 

Domains.co.za (Wayne)

Domains.co.za representative
Company Rep
Joined
Mar 27, 2013
Messages
246
South Africa is not the first country to do this. I'm sure most international providers have systems in place to facilitate it

@joelus, correct we are probably not the first country to do this, however we are a small country by comparison, have a different currency that fluctuates minute by minute, we have exchange control regulations and many other issues that would differ us from an European country for example
 

Domains.co.za (Wayne)

Domains.co.za representative
Company Rep
Joined
Mar 27, 2013
Messages
246
- Will you issue a South African compliant tax-invoice?
- Will the invoice be in Rand or USD?
- How will you deal with the exchange rate fluctuations (i.e. the exchange rate applied to my credit card order will differ from your tax invoice and from your VAT amount which you submit to SA revenue service)
- How will collected VAT be paid to South African treasury?
- Where did you receive advice that the tax legislation has been officially changed?
- Why bother complying with South African tax legislation?

Thanks for the points, gone to ask the same questions the first time this is mentioned.
 

Praemon

Expert Member
Joined
Jan 11, 2007
Messages
1,474
I have not read the legislation and leave the inner workings to the financial gurus. For me the main question is how international companies (charging in foreign currencies) will charge VAT (i.e. they could only charge VAT on the USD price and then transfer the VAT portion at whatever exchange rate via forex-transfer to treasury). Not quite sure how non-SA company and SARS will handle the exchange rate fluctuation. Technically the non-SA company would have to keep record of the exchange rate when the transaction occurred and based on that issue a tax-invoice. I still see that this will cause problems.

Even more interesting will be the scenario, where a number of local companies resell overseas services (think hosting, SMS gateways etc) - so their overseas ISP will now charge VAT and their cost will go up by 14%.

I guess it depends on the company, but they would need to keep track of the exchange rate, and presumably charge in ZAR. I read up on the process of registering, and the registration process seems simple. Apparently (who knows if it will actually work like this), but companies can signup and be registered "within 72 hours" with SARS, and they don't need a local rep. It's also all done online. They basically do a VAT return once a month and transfer the money to SARS. The main issue is these companies doing the work on their websites to allow for VAT for a specific country. The big sites already do this though, so it's likely the smaller companies offering unique products/services who will block trade with SA rather than register. Then again, if they're earning decent revenues from SA, why not make the effort?

Btw, regarding this: "where a number of local companies resell overseas services (think hosting, SMS gateways etc) - so their overseas ISP will now charge VAT and their cost will go up by 14%. ", it won't make a difference, assuming the company has a local office. Local companies have always had to pay VAT on digital goods/services. The only local companies that will increase their prices are the ones who were evading tax before, and now can't ;)
 
Last edited:

Domains.co.za (Wayne)

Domains.co.za representative
Company Rep
Joined
Mar 27, 2013
Messages
246
Btw, regarding this: "where a number of local companies resell overseas services (think hosting, SMS gateways etc) - so their overseas ISP will now charge VAT and their cost will go up by 14%. ", it won't make a difference, assuming the company has a local office.

So, no local office (which most international suppliers don’t have) means increase in pricing by 14% to local supplier who has no choice but to increase his price by 14% thus consumers end up paying more.
 

Praemon

Expert Member
Joined
Jan 11, 2007
Messages
1,474
So, no local office (which most international suppliers don’t have) means increase in pricing by 14% to local supplier who has no choice but to increase his price by 14% thus consumers end up paying more.

But the local supplier already has to pay VAT. Currently, if they're not VAT registered, they have to pay VAT within 30 days of receiving the digital goods/service to SARS. If they're VAT registered, they pay the VAT on sales. Either way, they're already paying 14% VAT. So what happens now, is that the VAT is charged by the international supplier to the local supplier. So in that case, if the local supplier is not VAT registered, they don't need to declare it to SARS, cause it's already paid. If they're VAT registered, they'll claim back the VAT as they'll be issued a VAT invoice.

Yes, if the international supplier is selling directly to the consumer they'll see a price increase, but if it's being resold by a local supplier, they won't (or shouldn't).
 
Top