Last week the tax man in South Africa published draft legislation that taxes online sales to South-African residents. Although the rules look pretty straight-forward, there are lots of open ends. A couple of initial thoughts:
- How do they want a U.S. online seller to register in South Africa? There is currently no mechanism to register, file returns and pay taxes for non-resident businesses.
- This applies to sale to both South-African resident individuals as well as businesses. A reverse charge for the latter would be much simpler.
- In the EU only “automated” online sales (f.e. downloads of software) are covered by the e-commerce VAT rules. Non-resident sellers of for example one-on-one teaching (say via Skype) are not required to account for VAT. The South African rules include this type of services, which can be challenging if an exemption applies for classroom teaching.
The rules are slated to take effect from April 1, 2014.
Have a look here for more info:
The document is here: