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Digital Media and Tax Base Erosion

04 September 2013   (0 Comments)
Posted by: Author: Deloitte
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Author: Deloitte (Moneywebtax)

The lack of current South African VAT legislative rules on ‘place of supply' is allowing South Africans using ‘eCommerce' to effectively download digital content from international suppliers without the levying of 14% VAT at the cost of the fiscus and local businesses, which are becoming uncompetitive in the face of this trade, says professional services firm Deloitte.

Typically, VAT is not being presently accounted for when local consumers download movies, music, games, software, books and other products from foreign suppliers, raising concerns that local consumers are willingly, or unwittingly, ignoring statutory requirements.

"What must also be considered is the fact that government is not actioning legislation to plug this significant loss of tax revenue as it does not have the resources to effectively police such requirements," says Dr. Anne Bardopoulos, Manager in the Taxation Service VAT service area at Deloitte.

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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