The list of electronic services supplied by non-residents that will attract VAT will be extended.
The definition of "enterprise" was amended with effect from April 2014 to include the supply of electronic services from a place outside South Africa to a South African resident, where the payment for the services originates from a South African bank. The intention of this amendment was clearly to force non-residents who supply electronic services to register for VAT. Currently "electronic services" include internet-based courses and webinars; internet-based games and betting; internet auction services; e-books and music downloads; and subscriptions to internet-based newspapers and magazines. The budget announced that the list of electronic services will be extended to include "software and other electronic services". Given that the users of electronic services include a large number of individuals who are not VAT vendors, who are unlikely under the current regime to pay the VAT on the importation of the services, this amendment will place South African VAT vendors (who have to charge VAT) on a more equal footing with non-resident suppliers (who are not currently charging VAT).