VAT changes!!

by Amanda Roothman on 19 May 2019

vat .pngNational treasury published the following regulations recently effective, 1 April 2019:

Foreign businesses that supply services to customers by means of any consideration whatsoever, would be liable to register for VAT in South Africa, if: 

  • An Annual Turnover of R 1million is expected (This means that if their turnover is in excess of R 85 000 for two consecutive months, the expected turnover is above R1 million per annum); and
  • When two of the following circumstances is true for the specific business:
    If the customer that the service is supplied to, is a SA resident, or SA Company;
    If the customer has a SA postal, residential or business address;
    If the payment of this service is from a SA bank account.

Types of services:

Any of the following services would attract VAT that foreign businesses supply to South Africans: 

  1. Advertising services; 
  2. Broadcasting; 
  3. Cloud Computer Services; 
  4. Gaming;
  5. Reservation services using online platforms; 
  6. Software subscription services

An interesting fact on reservation services using online platforms: 

Where an online platform charges a facilitation fee for the booking of accommodation for a South African resident customer (accommodation inside or outside South Africa) the service supplied by the platform falls within the ambit of electronic services. 

This service is therefore subject to VAT at 15% on the facilitation fee.  

Intermediary facility: 

If a foreign supplier of electronic services provides the service by using the electronic platform of an intermediary, the intermediary will by deemed to be the supplier for VAT purposes, if the intermediary facilitates the supply of the electronic service, and is responsible for issuing the invoice, and collecting the payment. 

In this case, the foreign service provider has no obligation to register for VAT in SA. 

If an intermediary only facilitates the supply of electronic services on behalf of the foreign service provider and outsource the issuing of the invoice and collection of payment to a third-party supplier, the intermediary may still also be required to register and pay VAT in SA. 


Failure to register for VAT on a timeous basis would lead to interest and penalties imposed by SARS. The foreign business will then also incur reputational damage that will impact their business in SA.

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