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ARTICLE · 12 JULY 2013

Proposed New Vat Rule for Foreign E-Commerce Suppliers

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The draft Taxation Laws Amendment Bill for 2013, released for public comment in early July 2013, has proposed an interesting new rule applicable to foreign suppliers of e-commerce products.

CanadaTax
Conor McFadden
Conor McFadden
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The draft Taxation Laws Amendment Bill for 2013, released for public comment in early July 2013, has proposed an interesting new rule applicable to foreign suppliers of e-commerce products. Presently foreign suppliers of e-books, e-music, e-movies or e-software programmes that transact over the internet with their South African customers are not required to register as vendors for value-added tax ("Vat") purposes. South African Vat legislation does not cater for place of supply rules in order to determine which jurisdiction has taxing rights in respect of supplies made by foreign suppliers to South African customers.

The acquisition of any e-products by any person in South Africa from a foreign supplier is currently classified as an imported service in terms of the Value-Added Tax Act (89 of 1991 ("Vat Act")). Most e-commerce customers are unaware of their obligation to account to the South African Revenue Service ("SARS") for Vat at the standard rate of 14% in

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