VAT charged on foreign digital services
The government has proposed that all foreign businesses supplying e-books‚ music and other digital goods and services in South Africa be required to register as VAT vendors.
In the Budget Review document released on Wednesday (27 February)‚ the National Treasury said this was in line with international trends‚ such as regulations adopted by the European Union requiring such suppliers to register for VAT in the country where the consumer resides.
"In the case of imported services or digital supplies‚ such as e-books or music‚ no border post or post office can perform the function as collecting agent‚ as is the case with physical goods. The net result is that the local consumer can buy imported digital goods or services without paying VAT‚" the document said.