Whether the Google Adwords service constitutes ‘electronic services’ according to the VAT Act
29 October 2014
Posted by: Author: SAIT Technical
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
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.