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As one of the key regions we work in we are constantly keeping an eye on changes in the South African eCommerce market, and this new year brought a large change to eCommerce regulations in the country.

A couple of months ago South Africa’s National Treasury published its Electronic Services Regulations, for public comment. This follows last year’s budget requiring foreign businesses supplying electronic services to register as value-added tax (VAT) vendors. The regulations are the latest move by the government as part of their efforts to bring eCommerce under the VAT regime, as currently South African consumers are able to buy imported digital products without paying any VAT. This disadvantages local suppliers who have seen orders drop significantly in recent years as consumers’ source products online at much lower costs.

Following the initial proposal for a digital tax last year, PWC’s head of indirect tax, Gerard Soverall, stated that the levels of revenue generated by large online retailers are now so high that it is resulting in governments losing out on large amounts of VAT. Soverall countered the backlash from consumers by arguing that, even if South Africa’s 14% VAT is passed on to consumers, purchasing goods online will still be more affordable than purchasing the same product in a brick and mortar shop.

As we head into a new fiscal year many South Africans are now asking what exactly will be taxed under the new regulations. So we have compiled a list for you, according to the recent regulations document, of all the goods and services that will be impacted.


Educational services

  • distance teaching programmes
  • educational webcasts
  • internet-based courses
  • internet-based education programmes
  • webinars

Games and games of chance

  • internet-based games, including any electronic game or multiplayer role-playing game
  • interactive games, such as games of chance, where the result is influenced by the skill of the player
  • Electronic betting or wagering

Maintenance services

This refers to technical support relating to

  • blogs
  • databases
  • information systems
  • information system services
  • Websites

Online content

  • eBooks (refers to any digitised content or electronic publication)
  • films ( refers to any broadcast, documentary home-made video, live streaming performance, movie, music video, program, television series, or video)
  • images (refers to any desktop theme, photographic image, pictorial image, or screensaver)
  • music (This includes any audio clip, broadcast jingle, live streaming performance, ringtone, song, or sound effect)
  • Software (This includes apps, system software, or plugins, and any update to these programs)

Subscription services

Any subscription service to blogs, databases, information system services, journals, magazines, newspapers, games, social networking services, webcasts, websites, web applications, web series.

As well as Information system services and Internet-based auction service

 

As Soverall argued- it is a profit issue at the end of the day. With the new regulations due to come into effect in this month we would love to hear from you, the South African Consumer. What are your opinions on the new regulation? A necessary addition in the rapidly evolving South African eCommerce market or just another way for the government to make money?


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