Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Blue Label Telecoms to change its name as restructuring gathers pace

      11 July 2025

      Get your ID delivered like pizza – home affairs’ latest digital shake-up

      11 July 2025

      EFF vows to stop Starlink from launching in South Africa

      11 July 2025

      Apple plans product blitz to reignite growth

      11 July 2025

      Nissan doubles down on South Africa despite plant uncertainty

      11 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Bitcoin pushes higher into record territory

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS+ | MVNX on the opportunities in South Africa’s booming MVNO market

      11 July 2025

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » A » SA losing out on tax online

    SA losing out on tax online

    By Craig Wilson9 September 2013
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Anne Bardopoulos
    Anne Bardopoulos

    South African Internet users purchasing goods, especially virtual services and content, from international suppliers are hurting the fiscus and making local businesses less competitive. That’s the view of a tax specialist at auditing firm Deloitte, who says VAT is seldom levied on these purchases.

    VAT is generally not being accounted for when consumers download movies, music, games, software, books and other products from foreign suppliers, which Deloitte argues raises concerns that consumers are “willingly or unwittingly ignoring statutory requirements”.

    Anne Bardopoulos, manager in the tax service department at Deloitte, says another consideration is that government does not have the resources to police what she calls a “significant loss of tax revenue”.

    The crux of the matter is the lack of “place of supply” rules, which results in “uncertainty as to whether a foreign supplier is required to register and collect VAT from South African residents, especially when e-commerce transactions are involved”, Bardopoulos says.

    It does not matter whether a foreign supplier disputes its obligation to register for VAT in South Africa, as the tax can still be collected in terms of the “reverse charge mechanism”, in terms of which the consumer pays the VAT, she says.

    Although the effect of VAT not being paid on international purchases is difficult to measure, Bardopoulos says it is “undoubtedly substantial”.

    “The impact also has to be considered as foreign merchants, often with larger markets and other supply benefits, are often cheaper. Add an additional 14% price advantage and the competitive edge over South African suppliers of similar products increases markedly.”

    Finance minister Pravin Gordhan in February proposed that foreign businesses selling e-books, music and other digital goods and services should be required to register as VAT vendors “in line with regulations which have been adopted by the European Union and other tax jurisdictions”.

    However, Bardopoulos says the draft amendments to proposed legislation assign a broad definition to e-commerce, which could be problematic because it could create uncertainty regarding which services should be considered as e-commerce.

    The draft amendments propose that foreign e-commerce suppliers should not be subject to a threshold on taxable revenue — currently set at R1m in any 12-month period — and therefore would need to register if conducting any business with South African residents, Bardopoulos explains, even if for only a nominal amount.

    However, she says the issue of enforcing this proposed legislation and its wide reach have not been addressed in the draft bill.

    The threshold will still apply to local online retailers, who will have a greater advantage than foreign suppliers where their supplies do not exceed the threshold. These companies will not be required to register and levy VAT.

    “The proposed amendments will introduce a ‘place of supply’ rule … by stipulating that supplies will be taxable in South Africa if the consumer is a resident of South Africa or payment is effected from a South African bank account,” she says. “The practicality of requiring the foreign supplier to determine if the consumer is a South African resident will need to be addressed.”

    Other potential pitfalls of the draft legislation include whether foreign suppliers will have to comply with issuing a valid abridged South African tax invoice; the need for sellers to make it clear on their websites whether or not they include VAT; and whether foreign suppliers registering for VAT in South Africa will have to operate a South African bank account, appoint a local VAT representative, or ensure that required documentation is “open for inspection” by the South African Revenue Service.

    “Regardless of these and other issues that have to be resolved, the proposed amendments represent a move in the right direction to reduce the loss of tax revenue arising from digital media supplies,” Bardopolous says.  — (c) 2013 NewsCentral Media



    Anne Bardopoulos Deloitte Pravin Gordhan
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleStart with the Finnish
    Next Article Service key to cutting mobile churn

    Related Posts

    Could the iPhone soon be cheaper in South Africa than America?

    8 April 2025

    Tax cut on basic smartphones will make little difference

    14 March 2025

    R20-billion earmarked for expansion of hi-tech Waterfall City precinct

    25 November 2024
    Company News

    $125-trillion traded: Binance redefines global finance in just eight years

    11 July 2025

    NEC XON welcomes HPE acquisition of Juniper Networks

    11 July 2025

    LTE Cat 1 vs Cat 1 bis – what’s the difference?

    11 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.