ON BUDGET Day, National Treasury released updated draft regulations on the VAT taxation of electronic services provided by foreign companies. These changes were mentioned in the Budget.
A statement by auditing firm PwC says that in 2014 the VAT Act was amended to include in the definition of “enterprise” the supply of “electronic services” by foreign suppliers, which were required to register for VAT where supplies exceeded R50 000.
“Electronic services” included certain educational services, games and games of chance, internet-based auction services, e-books, audio-visual content, still images, music and various subscription services, but excluded services such as cloud-computing and software, which are often supplied in the business-to-business (B2B) environment.
If enacted, PwC says, the amended draft regulations published this week would result in a significant overhaul of the VAT treatment electronic services.
The proposed amendments: