Must VAT be charged on “exported services” rendered over the internet?
09 June 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: Someone has a client outside of South Africa, to which he provides a
service. The service is carried out in South Africa, (over skype), but invoiced
to the foreign country. Should VAT be charged?
A: We assume the ‘someone’ is registered as a
vendor. Output tax will have to be levied, but it may be that the rate of
zero percent will apply. It will apply if section 11(2)(l) applies.
It will apply if the services are supplied to a person who is not a resident of
the Republic, not being services which are supplied directly-
connection with land or any improvements thereto situated inside the Republic;
connection with movable property (excluding debt securities, equity securities
or participatory securities) situated inside the Republic at the time the
services are rendered, except movable property which-
exported to the said person subsequent to the supply of such services; or
forms part of a supply by the said person to a registered vendor and such
services are supplied to the said person for purposes of such supply to the
registered vendor; or
the said person or any other person, other than in circumstances contemplated
in subparagraph (ii)(bb), if the said person or such other person is in the
Republic at the time the services are rendered,and not being services which are
the acceptance by any person of an obligation to refrain from carrying on any
enterprise, to the extent that the carrying on of that enterprise would have
occurred within the Republic.
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.