VAT Liability: Imported vs Electronic Services

The supply of most goods or services in South Africa is subject to value-added tax ("VAT") at 15%. Where cross-border services are involved, challenges can arise to establish whether the non-resident supplier is required to register for and charge VAT to the South African resident recipient, or whether the recipient purchaser is required to self-assess (reverse charge) VAT at 15% on imported services. This distinction is particularly relevant in the context of electronic services.

Electronic services

South Africa introduced electronic services legislation in June 2014 and significantly expanded the scope thereof with effect from 1 April 2019. In the context of electronic services, a non-resident supplier (who does not have any physical presence in South Africa) is regarded as carrying on a VAT "enterprise" in South Africa if it supplies "electronic services" as prescribed by the Minister of Finance by regulation, and at least two of the following circumstances