[Question] Online Business from EU with SA end customers

[PanMuc]

Dear Forum,

first of all, a warm (weather related cold...) Hello to everyone from Germany.

Iīm having an issue to get the right Information regarding a VAT matter. Ok, itīs a bit usual case, but nevertheless an expert should be able to answer. You canīt Imagine whom Iīve already asked... inconsistent answers

Maybe you guys may help me to get the needed answers.

We are small Company from Germany who is having the copyrights for many German Video and Audio tracks, this includes also the southern African region. Our Company is situated in Germany and we have no plans to open up an affiliate in South Africa, even we are looking forward to accept end customers from South Africa.
What we plan to do is the following. A potential client/end user from South Africa can register via our website and purchase a subscription for 3, 12 or 24 month and consume the product in South Africa via his end user device.

So far it sounds simple. The question is, are we obliged to charge the South African VAT from this end user as German company with no registration in South Africa, and how should we pass through the collected VAT to SARS?
In case we donīt charge the VAT from our end user, are we acting illegal? What impact is to expect?
What is your pragmatic advise we should do?

I hope you can help e in this matter.
BR
PanMuc

[Dave A]

Funnily enough, I heard a rumble recently that SARS (the SA tax authority) was looking at requiring offshore companies that make online sales into South Africa to register for VAT.

I think tax authorities around the world are starting to take a closer look at online sales across borders - or at least taking the issue more seriously ever since the UK identified that Amazon sales into the UK weren't generating any tax in the UK.

[CLIVE-TRIANGLE]

I doubt much will come of it, especially with regards to downloadable media. I can imagine them levying a duty on foreign credit card payments and tasking the banks with administering it. They would run into jurisdiction if they tried taxing at source.

PanMuc the short answer is No, there are no concerns for you.

[PanMuc]

PanMuc the short answer is No, there are no concerns for you.

Hi Clive, thanks for the answer. This is also we have concluded in the meantime.

The funny thing is, that everyone we asked, told us that there is a rumour SARS wants to implement a process for foreign companies doing internet business on the RSA territory, but when nobody knows...

Ok, to double-check this, we have requested a German-South African attorney in Stellenbosch to confirm our conclusion.

[PanMuc]

BTW, thanks to all for their answers! I couldnīt find the EDIT button, sorry for double posting...

[CLIVE-TRIANGLE]

Well SARS has an insatiable appetite these days, and they would love to impose VAT on these transactions. The practical problems are substantial.

This, latest discussion I can find, is on Itweb. and it is current.