Microsoft wins VAT advertising appeal

Sounds fair, since it complies with the rules.

It is annoying however, when you go searching for retail prices and they slap you with an ex VAT price... and yeah, some places still do it.
 
Seems like a loophole to me. they are advertising to SA public, in SA, so surely the VAT exclusion should not be an exception. That means all items advertised by massmart stores could also legally be advertised excluding VAT since Wallmart is not an SA company.
 
Bernie said:
Seems like a loophole to me. they are advertising to SA public, in SA, so surely the VAT exclusion should not be an exception. That means all items advertised by massmart stores could also legally be advertised excluding VAT since Wallmart is not an SA company.
Click to expand...

No not quite..

With this, you are buying from MS Ireland.

Massmart stores are run by a company in SA (which is majority owned by Walmart) therefore they have to include VAT.
 
it seems remarkably related to the states taxing problem in the US at the moment: http://en.wikipedia.org/wiki/Amazon_tax for a primer but not authority

The point though is that Microsoft didn't contravene the VAT rules and are fully complaint with the law. Imagine a South African firm having to provide a fully inclusive price for every city in the US, Microsoft in Ireland has no idea what South African taxes and customs to include in a pricing document so it relies on SARS advisory.
 
Bernie said:
Seems like a loophole to me. they are advertising to SA public, in SA, so surely the VAT exclusion should not be an exception. That means all items advertised by massmart stores could also legally be advertised excluding VAT since Wallmart is not an SA company.
Click to expand...

You will find that the Massmart companies are registered for VAT purposes in South Africa, whereas Microsoft Ireland is not.
 
Oh someone is in for a rude surprise. Imported goods/services require a notional *output* VAT to be paid to SARS, depending on source rules. So chances are pretty good that not only can customers not claim input, but they have to pay output too.

So the customer still ends up paying Incl VAT prices effectively. I don't think the law covers that angle though.
 
HavocXphere said:
Oh someone is in for a rude surprise. Imported goods/services require a notional *output* VAT to be paid to SARS, depending on source rules. So chances are pretty good that not only can customers not claim input, but they have to pay output too.

So the customer still ends up paying Incl VAT prices effectively. I don't think the law covers that angle though.
Click to expand...

Yep, VAT must be levied on imported good/services. If I remember correctly a VAT 215 should be completed. However it is not really a very enforceable method and people end up importing services without ever paying VAT on them.
 
HavocXphere said:
Oh someone is in for a rude surprise. Imported goods/services require a notional *output* VAT to be paid to SARS, depending on source rules. So chances are pretty good that not only can customers not claim input, but they have to pay output too.

So the customer still ends up paying Incl VAT prices effectively. I don't think the law covers that angle though.
Click to expand...

One does not pay VAT on downloadable content from foreign stores which sell downloadable games, software, music, etc. SARS just hasn't figured out a way of taking that cash. I am sure they are working day and night on an effective way of doing that though.
 
Similar to above example.

Look not VAT here either:
http://www.gog.com/gamecard/the_witcher_2

Yes, SA public and SA Paypal account or CC will work.

No VAT is not included in the price nor mentioned.

Someone call the ASA and prepare to invade Cyprus where Gog.com is headquartered.

Furthermore these guys are selling this game, legally and bypassing the local SA distributor. And there is no FPB rating. :eek:
 
@Space_Chief

I'm not sure of the details but that's because you as the purchaser are supposed to pay VAT to SARS as far as I understand.

It's not that there isn't any VAT it's the fact it's impossible for SARS to collect it from a foreign company therefore they put the responsibility on you as the purchaser to declare any importation of goods/services.

Also look at EA's Origin, you pay VAT on their games even as downloadable content.
 
As has been stated, the importer of the services needs to pay the import VAT via the form VAT215 which is available on the SARS website, but there is little compliance with this requirement as the only VAT implication is for recipients who are NOT registered VAT vendors. A summary of the the rules:

02
Notes
1. "Imported services" means a supply of services that is made by a supplier who is resident or carries on business outside
the Republic of South Africa (Republic) to a recipient who is a resident of the Republic to the extent that such services
are utilised or consumed in the Republic otherwise than for the purpose of making taxable supplies.
2. "Recipient" in relation to any supply of services and for purposes of this declaration, means the person to whom the
supply is made and who is not a vendor as defined in section 1 of the Value-Added Tax Act, No. 89 of 1991 (the Act).
3. This declaration is required in terms of section 14(1) read with section 7(1)(c) of the the Act and must be completed by
a recipient, being a resident of the Republic who is not registered as a vendor.
4. The recipient of imported services must within 30 days of the earlier of the time an invoice is issued by the supplier or
recipient in respect of the supply of the imported services or the time any payment is made by the recipient in respect of
that supply furnish the Commissioner with a completed VAT215 declaration and calculate and pay the VAT on the value
of the of the imported services to the Commissioner.
5. The value to be placed on the supply of imported services is the greater of either the total amount of the money paid or
the open market value of the supply where the value is not reflected in money.
6. The VAT215 declaration, together with the payment of the applicable VAT must be made at the recipient's local SARS
Branch Office.
7. Penalty and interest:
Any person who is liable for the payment of VAT in the manner prescribed in NOTE 4 above, and fails to pay any amount
of such VAT within the period allowed for the payment of such VAT in terms of the said note, shall in addition to such
amount of VAT, paya)
A penalty equal to 10 percent of the said amount of VAT; and
b) Where payment of the said amount of VAT is made on or after the first day of the month following the month during
which the period allowed for payment of the VAT ended, interest on the said amount of VAT, calculated at the
prescribed rate (but subject to the provisions of section 45(A) of the Act) for each month or part of a month in the
period reckoned from the first day as defined in section 1 of the Act.
Click to expand...
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X