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It may not be cheap, but for the majority of what is available, South Africans have a very good market for online subscriptions to a wide variety of media. Spotify is a great platform for the best music ever, Netflix continues to give television the impression of being a heavy dinosaur that has stumbled into a gulf and the Xbox Game Pbad service is a buffet of play a good value for money.
Not cheap, but very affordable for most households who want a subscription. Well, most of the time at affordable prices, with the national treasury seeking to introduce new regulations requiring international services to evaluate what they offer and reclbadify as an electronic service. What must be remembered here, is that it will mean that these companies will have to register for VAT in South Africa, which probably means that consumers will pay a supplement at the end of the day for their subscription of choice.
"What is envisioned by the definition is that the services provided are essentially automated and involve minimal human intervention and are impossible to guarantee in the absence of information technology," he said. at BusinessTech, Seelan Moonsamy, VAT expert.
Only a limited number of services that can be provided by the aforementioned means is excluded from the definition of electronic services, namely regulated educational services in the country of export of the foreign service provider and telecommunication services.
With regard to what could be reclbadified as an electronic service? Almost everything with an online component:
- Software subscription services;
- The use of software by an entity in South Africa provided electronically by its holding company located abroad (unless the exclusion applies);
- Diffusion;
- Cloud computing;
- Advertising services;
- Games;
- All booking services via an online platform, etc.
"If these companies provide their services electronically and the total value of their services exceeds one million rand over a rolling 12-month period, they will have to register," Moonsamy added.
In the end, the customer would bear the value-added tax in the form of higher prices because VAT is – in economic terms – a consumption tax. I imagine that giants such as Amazon and Google would still remain very competitive on the basis of their ability to charge the rebate, so their likely registration of VAT for e-services would not have major impact on their ability to attract customers and their revenues.
The newly amended bylaw will come into effect next year on April 1 and is unfortunately not an April Fool's joke.
Last update: November 29, 2018
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