VALUE-ADDED TAX

SAIOM PRESENTATIONTHE IMPACT OF E-SERVICES UNDER THE DRAFT AND NEW REGULATIONS

Carmen Moss-Holdstock

Associate- Tax Department

LLB, LLM (SA and International Taxation), MCOM (SA and International Taxation), PG Dip (Company Law)

PG Certificate VAT, PG Certificate Income Tax, and PG Certificate CGT

SAOIM PRESENTATION

Alan Tait

“VAT may be thought of as the Mata Hari of the tax world – many are tempted, many succumb, some tremble on the brink, while others leave only to return, eventually the attraction appears irresistible”

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SAIOM PRESENTATION

Topics for discussion

current position and difficulties in respect of e-services

VAT on e-services

Draft Regulations

New Regulations

7 October 2013VAT on e-commerce 3

SAIOM PRESENTATION

VAT on imported services / reverse charge mechanism

the “enterprise” definition

lack of ‘place of supply’ rules and the need to even out the playing field

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SAIOM PRESENTATION

VAT ON E-SERVICES

limitations (collection / enforcement) in respect of VAT on imported services

international trend to impose VAT where the recipient of the services resides

foreign suppliers of electronic services required to register as vendors – R 50,000 per annum turnover threshold (payment basis)

effective date 1 April 2014

regulation issued by Minister of Finance stating which type of services must register for e-services VAT

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SAIOM PRESENTATION

IMPACT OF E-SERVICES

Educational Institutions v Other related cloud services and data warehousing

14% increase in cost of electronically supplied services

university unable to claim input tax by virtue of making VAT exempt supplies under section 12 of the VAT Act

can the university still be held liable for VAT if foreign supplier refuses to register vs impact of Cloud services and other data warehousing or platform technologyVAT on imported services still remains as backstop

what about ‘educational services’ exemption in section 14?

Supply of Services

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Thank you