Microsoft wins VAT appeal
An Advertising Standards Authority of South Africa (ASA) committee has upheld an appeal against a prior ruling which found that Microsoft‘s VAT exclusive prices for its products are not in line with South Africa’s advertising rules.
A consumer lodged a complaint against Microsoft’s Office 365 products with the ASA, saying that Microsoft does not include VAT in its pricing which is in contravention of the VAT Act.
Following the complaint, Microsoft committed to provide clarifying language around the issue of what VAT is applicable.
However, the South African Revenue Service (SARS) said that it is not permissible merely to quote the price excluding VAT and have a statement that VAT has been excluded.
The ASA ruled against Microsoft, ordering the company to withdraw the advertisement with immediate effect.
Appeal against Microsoft ruling
Microsoft appealed the ruling, saying that the content which was the basis of the complaint has been removed, and that the ASA had incorrectly relied on the SARS opinion.
It emerged that the services offered in the advert were sourced from Microsoft Ireland, and the only services provided by Microsoft South Africa were marketing services.
“Microsoft Ireland was not registered with SARS for VAT and that the price included a zero rating for VAT purposes,” the ASA website stated.
The ASA committee upheld the appeal, saying that the committee agreed that the opinion obtained in a previous matter by the ASA was not applicable in this matter as the service provider was not located in South Africa and therefore no VAT was applicable.
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