South Africa confirms delay to non-resident digital VAT plan

Wed 2nd Apr 2014

As reported last month, South Africa has delayed the introduction of VAT on foreign B2C digital supplies to its consumers. The new date of the introduction of the requirement to VAT register will be June 1 2014 according to the Treasury.

VAT on digital downloads, music, video and e-books

The measures will require online providers of streaming or downloadable films, books, games and music, as well as providers of software and cloud-based services to charge South African VAT at 14% on sales to individuals. The change follows a ruling in the tax courts in early 2013 that Microsoft in Ireland was free to provide such services VAT-free in South AfricaSouth Africa announced VAT on non-resident digital supplies first in March 2013.

The plan had been to introduce the obligation to collect VAT, complete returns etc. in January 2014. However, it has become clear that the industry is not yet ready; nor is the South African Revenue.

The South African Treasury claims that it will start taking applications for VAT registrations from 7th April. There is a Rand 50,000 annual turnover threshold before any non-resident corporation has to register, although this may be reviewed.

Click for free South African VAT info