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Thread: Import VAT on Digital products???

  1. #1
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    Import VAT on Digital products???

    Hi everyone,

    Im completely confused on this one and need to make sure before I make a massive mistake.

    We distributor products into South Africa and we going to start distributing Digital products which we buy online and then download them. We however recieve the boxes for the items and just add the download code to the box.

    Now the question comes in, the boxes will be imported and probably cost like R20??? or something, so we'll pay the VAT on that. Then after that the digital download becomes the question, we have to sell the items with VAT on them but the items cost close to R10 000.00, so we add VAT but now where is the input VAT to this, besides the boxes? Should we still pay VAT on it?

    I personally think this should be VAT free but thats my thoughts. Any ideas?

  2. #2
    Diamond Member Justloadit's Avatar
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    Nov 2010
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    Well there is no input VAT on this, which means pretty much that you will be collecting on the behalf of SARS the 14% output VAT which you hand over to the receiver.

    You can however claim as input VAT on everything else, like rent, electricity, packing material, postage or delivery charges, bank charges, telephone, communications, auditor fees, etc. Anything that is related to make the sale and delivery to the customer.

    Not sure why you have to register for VAT, unless you are doing more than the threshold per annum.
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