An analysis by ENSafrica, Taxand South Africa
Since 2014, South Africa has mandated VAT on certain electronically supplied services, initially targeting B2C transactions. The 2019 Regulations expanded this to include B2B services provided by non-residents over the internet, requiring VAT registration and payment if services exceed ZAR 1 million in a 12-month period.
This has led to non-resident B2B suppliers incurring administrative costs without generating additional revenue for South Africa, as resident businesses can reclaim VAT.
The 2024 Budget Review proposes amendments to limit VAT obligations to services supplied to end consumers, which, if enacted, would alleviate the need for B2B suppliers to register for VAT. However, until these changes take effect, non-resident suppliers must address any outstanding VAT liabilities.
Charles de Wet, Jo-Paula Roman, and Anjé Albertyn from ENSafrica, Taxand South Africa, analyse these new proposals in more detail here.
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