Changes to VAT treatment of e-services supplied in a B2B scenario in South Africa.

Changes to the VAT treatment of e-services supplied in a B2B scenario are live since 1 April 2019.

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The scope of e-services to which regulations previously applied included the provision of certain educational services, games and games of chance, internet-based auction services, e-books, audio-visual content, still images, music and various subscription services. The new e-services regulation changes broaden the definition of e-services.

From April 1 2019, e-services include any services supplied by means of an electronic agent, electronic communication or the internet for any consideration.

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The only “e-services” that are excluded under the new regulations are:
- Telecommunications services;
- Supply of educational services by a person regulated by  educational authorities in foreign countries;
- Certain inter-company supplies within a company group.

More importantly, the revised e-services regulations will not distinguish between B2B and B2C supplies.

Action Required

Due to the newly implemented changes, all non-resident suppliers of electronic services (not under the exception) may have a potential VAT registration liability in South Africa if their total turnover has breached the registration threshold of 1,000,000.00 ZAR in a 12-month timeframe.

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