Re: Fwd: Upcoming legislation: VAT on international/foreign e-Commerce (starting 1 Jan 2014)

On 31 Jan 2014, at 3:00 PM, Hendrik Visage <[email protected]> wrote:

> II. Reasons for change

Zooming in on the following:

> This lack of compliance has left local e-commerce suppliers
> (especially e-book providers) in an uncompetitive position vis-à-vis
> foreign suppliers of e-books. Foreign suppliers benefit because these
> suppliers are not required to charge VAT on their sales to South
> African customers (due to their wholly foreign location), and
> customers simply don’t pay the VAT. Meanwhile, local e-book suppliers
> are subject to VAT like any other vendor. The net result is a near 14
> per cent competitive advantage for foreign suppliers.

Any competitive disadvantage that a ZA supplier of services might suffer when competing with a foreign supplier is offset by the competitive advantage the same ZA supplier has in the other direction for the same reason. It all balances out.

If a ZA based supplier of services over the internet chooses to limit their market geographically and so is unable to take advantage of the tax advantage in the other direction, then that is their own fault. The law should not be protecting broken business models.

Regards,
Graham
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