- The South African Revenue Service has imposed updates to legislation regarding VAT obligations for international suppliers of electronic services to customers in South Africa.
- Foreign suppliers of electronic services may need to register for VAT in South Africa and levy VAT on supplies to South African customers.
- The 2014 Regulations captured only a limited number of transactions and generally only applied to business-to-consumer supplies, but the 2019 Regulations expanded the services that fall within the concept of “electronic services” to include business-to-business supplies.
- All foreign suppliers of electronic services to South African customers must register as VAT vendors if they meet the registration threshold of ZAR1 million in a 12-month period.
- The South African Revenue Service has issued correspondence to foreign suppliers suspected of supplying electronic services to South African residents, inviting them to register for VAT or notifying them of a mandatory VAT registration obligation.
- Foreign suppliers who provide services to South African customers should consider their potential VAT obligations and consult with South African tax advisors.
- The relevant supply agreements should be reviewed to determine if the services supplied are electronic services and if the supplier can clawback VAT from the recipient.
- Foreign suppliers should establish whether they need to register as a VAT vendor in South Africa before receiving correspondence from the South African Revenue Service.
- It is important to engage with the South African Revenue Service promptly if correspondence is received, but foreign suppliers can appoint local tax advisors to understand their obligations before responding.
- Tax advisors can assist foreign suppliers in assessing their VAT obligations, preparing tax opinions, and managing interactions with the South African Revenue Service.
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.