Tax and register a company in south africa

[bertus60]

Hi bertus here,

Whant to start a online digital service company like selling ebook covers logos ect.
Do I have to charge a client vat/tax on the service when the client is from usa or uk?
If I must also have to register a company in south africa where do I do that?
Thnks in advanced
Best Regards
Bertus

[BusFact]

Hi Bertus

Note that you can only charge VAT if you are registered for VAT and have a VAT number. To do so you need to register with SARS and have to already have done at least R50'000 in turnover before they will even look at the application. Personally I don't think its worth registering until you hit over R1 million in sales which is the level that SARS says you have to register at.

Even if you are registered, I don't think charging a client overseas is VATable. But get a second opinion on that.

Not sure why you want to go through the hassle and expense of registering a company if its still a new, simple and one man business, but if that is the route you want to follow, you register at www.cipc.co.za.

[SilverNodashi]

I think UK clients do need to pay VAT, but suspect you would need an export license as well.
Applying for VAT is rather straightforward but you need to have done at least R50,000 worth of sales.

[BusFact]

I think UK clients do need to pay VAT, but suspect you would need an export license as well.

Hmmm. Have my doubts. There is VAT in Europe, but it has nothing to do with us in SA and SARS. I also doubt you need an export license for doing a service over the internet. If you export physical products overseas you will need an exporters code. A few tariff codes (product types) may require a license, but they tend to be in the minority.

[bertus60]

Hi Busfact,
What I find out no I don't charge vat for over seas client I do have to pay tax I will be a sole-proprietor doing business doing business under my own name.
Not sure what means under your own name I will let you guys know how the tax story will go
Thks everyone

[BusFact]

Under your own name as a sole proprietor means that your own name is the business name. So your invoices will have your name on it and when someone invoices you they will put your name on their invoice. The bank account will be in your name too. There is no company name necessary.

[Dave A]

Local supplier to local customer - the local tax regimes and thresholds apply.

Local supplier to foreign customer - Could get interesting, but as I understand it you don't charge (SA) VAT on goods and services delivered overseas.

The thing to really watch for is there's a fundamental shift in government thinking happening around the world when it comes to online business and taxation. Originally the view was the taxation regime is based entirely on the location of the supplier. This has now shifted towards a view that elements of taxation should be based on the location of the customer.

We've already seen the result with local VAT legislation on foreign supplies to local residents. There's also something similar rolling out on VAT across Europe at the moment (or has it already been implemented?).

It's all got a bit messier, and probably tougher for small operators...