SARS – Important Update on VAT for E-Services from Foreign Suppliers
Of significance is the change in the definition of electronic services - in the original draft regulations e-services were specifically listed but the new definition is very wide – “any services supplied by means of an electronic agent, electronic communication or the internet for any consideration” (our emphasis).
Furthermore, the inclusion of business to business (B2B) supplies is a significant departure from the global trend to only include business to consumer (B2C) supplies as the former is an “in and out”, increasing the tax administrative cost rather than tax collections.
The exclusions from the definition are still –
- Educational services supplied from a place in an export country and regulated by an educational authority in terms of the laws of that export country; or
- Telecommunications services; or
- Services supplied from a place in an export country by a company that is not a resident of the Republic to a company that is a resident of the Republic if –
- Both those companies form part of the same group of companies; and
- The company that is not a resident of the Republic itself supplies those services exclusively for the purposes of consumption of those services by the company that is a resident of the Republic.