VAT in South Africa guide

South African VAT for digital service providers

In June 2014, South Africa made income earned by non-resident providers of electronic services to consumers liable to Value Added Tax. The threshold for supplies of e-services is ZAR1 million during a 12-month period.

This was extended from 1 April 2019 to B2B services provided to South African businesses by foreign providers.

List of digital services that are the subject of South African VAT

• Online gaming and games of change;
• Internet-based auctions;
• Online journals, blogs, newspapers, social media, webcasts, apps and web services;
• Online media, music, e-books and images;
• Education, excluding those services provided and regulated by the education authorities.

VAT rates

The term “taxable supplies” refers to supplies of goods and services that are subject to tax at either the standard rate (15%) or zero rate (0%). A vendor must account for VAT at the standard rate on all supplies of goods and services, unless the supply is specifically exempted or zero rated under the VAT Act.

Late – registration penalties

person has to register for VAT within 21 days of becoming liable for registration. A 10% late payment penalty, interest at the prescribed rate (10.5% per annum) and an understatement penalty of between 5% and 200% of the VAT payable may be levied in a case where a person registers late. Where such late registration is made under a voluntary disclosure application, the understatement penalty will not be levied and the person can apply for a remission of the 10% late payment penalty.