Digital products taxed in SA from April: Treasury

http://mybroadband.co.za/news/internet/95953-digital-products-taxed-in-sa-fr
om-april-treasury.html 

 

 <http://mybroadband.co.za/vb/showthread.php/477252-National-Treasury>
Treasury has published new electronic services regulations, detailing which
digital products and services will be subject to 14% VAT come 1 April 2014.

The regulations have been published by Finance Minister
<http://mybroadband.co.za/vb/showthread.php/314269-Pravin-Gordhan> Pravin
Gordhan for comment, and follow the proposals he made in his 2013 budget
speech to impose VAT on foreign businesses who "sell e-books, music and
other digital goods and services".

The regulations are called the Electronic Services Regulations and come into
operation on a proposed date of 1 April 2014.

In terms of the regulations, the VAT will apply to any supplier of
electronic services from an "export country" to any resident in South
Africa, or where payment is made from a local bank.

What exactly will be taxed? The list below details all digital goods and
services which will be impacted, according to the regulation document:


Educational services


.         distance teaching programmes;

.         educational webcasts;

.         internet-based courses;

.         internet-based education programmes; or

.         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.


Information system services


Internet-based auction service


Maintenance services


Which refers to technical support relating to

.         blogs;

.         databases;

.         information systems;

.         information system services; and

.         websites.


Online content


.         e-books, which means any digitised content of any book or
electronic publication;

.         films, which means any broadcast, documentary home-made video,
live streaming performance, movie, music video, program, television series,
or video

.         images, which means any desktop theme, photographic image,
pictorial image, or screensaver,

.         music, which means any audio clip, broadcast jingle, live
streaming performance, ringtone, song, or sound effect,

.         software, including 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; or

.         web series.

The added taxes on digital goods is likely to push the price of goods up, a
tax expert has said.

Following the initial proposal for a digital tax, Gerard Soverall, PWC 's
head of indirect tax, said that, considering the revenue generated by large
online retailers, governments are losing out on large amounts of VAT.

"It is a profit issue at the end of the day. VAT at 14% in South Africa is a
material number in your profits so online businesses will pass that on [to
consumers]. There is not much doubt in that," said Soverall.

Soverall argued that, even if the 14% SA VAT is passed on to consumers,
digital goods are still likely to be more affordable than the physical
equivalent purchased in brick and mortar shops.

[The Electronic Services Regulations is available on the National Treasury
website: www.treasury.gov.za and the South African Revenue Service website:
www.sars.gov.za.
Written    comments    should    be    submitted    to    Mr.    Mpho
Legote,    email: [email protected] and SARS, email
policycomments-hP/[email protected] by the close of business on 20 February 2014.
Issued by National Treasury Date:    30 January 2014]

_______________________________________________
IOZ mailing list
[email protected]
http://lists.internet.org.za/mailman/listinfo/ioz