The public has until February 20 to make their input on the National Treasury’s Electronic Services Regulations.
The publication of the regulations follows Finance Minister Pravin Gordhan’s announcement in the 2013 budget that all foreign businesses supplying e-books, music and other digital services in SA will be required to register as Value Added Tax vendors.
This announcement was made against the backdrop of efforts, both internationally and locally, to bring cross border e-commerce (specifically the digital economy) into the VAT regime.
Currently, local consumers can buy imported digital products without paying VAT. This outcome not only places local suppliers of digital services at a competitive disadvantage compared to suppliers from abroad, but also results in a loss of revenue for the fiscus, noted Treasury.
The VAT legislation was amended to bring the digital economy more comprehensively into the VAT net and provides for the minister to issue Regulations prescribing imported services that will be covered by the new electronic services definition in the VAT Act.