South Africa: New Digital Economy Rules
Ministry of Finance Regulations No. 5993, dated 14 March 2025, introduce significant changes to the definition of “electronically supplied services” for VAT reporting purposes.
These changes are effective from 1 April 2025 and affect foreign digital service providers selling to South African customers.
The changes impacting Foreign Digital Service Providers are as follows:
- B2B Supplies:
- If a foreign supplier sells exclusively to VAT-registered South African businesses, VAT registration in South Africa is no longer required.
- B2C Supplies:
- Sales to non-VAT-registered customers (e.g., individuals, small businesses, schools) still require VAT registration.
- Mix of B2B and B2C Supplies:
- If a non-established supplier makes both B2B and B2C supplies:
- VAT liability will apply to both types of supplies.
- Both B2B and B2C supplies will be considered when determining if turnover exceeds the VAT registration threshold.
- Intergroup Supplies:
- Intergroup supplies are not considered electronically supplied services subject to VAT if the following conditions are met:
- The supplier is non-established.
- The customer is a business within the same corporate group.
- The non-established company supplies electronic services it exclusively discovered, devised, developed, created, or produced for the South African resident company’s consumption.
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