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Whether the Google Adwords service constitutes ‘electronic services’ according to the VAT Act

29 October 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: I am aware that as from 1 June 2014 the foreign supplier of an "electronic service" to South African customers is required to register for and charge VAT. I have read the "Electronic Services Regulations" on Government Gazette 37489 but find the descriptions or definitions a bit vague.

Would you please let me know whether, in your opinion, payments to Google for their "AdWords" services (pay per impression advertising) would be excluded from "electronic services" as defined in the GG 37489 i.e. that no VAT should be paid on these imported services.  

A: The Technical Department had a look at your query and was not able to provide you with a concrete answer as to whether the supply of such advertising services by Google would constitute ‘electronic services’ as defined in section 1 of the Value-Added Tax Act (No. 89 of 1991) (hereinafter ‘VAT Act’) read with the Regulations. There is a chance that the advertising services might fall under para 7(l) of the Regulations but to express an opinion as to whether this is in fact the case is not possible.

It is therefore advised that you approach SARS directly with your query or that you apply for a binding ruling in terms of Chapter 7 of the Tax Administration Act (No. 28 of 2011).

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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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