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Thread: VAT on Overseas services

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    VAT on Overseas services

    Hi all,

    A South African company purchases software and apps from overseas suppliers like Google on a monthly basis, Should the company be getting Tax Invoices from these overseas companies charging SA Vat at 15 %? And can this in turn be claimed back from SARS?

    Thanks!

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    Diamond Member Justloadit's Avatar
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    Overseas companies, can not charge VAT as far as SA is concerned.
    There may be a localized VAT or other tax, which becomes part of the cost of the product.

    In the case of software, I am not sure where as a local company you pay an input VAT. Generally if goods arrive here by transport whether air, sea or postal, when clearing the parcel, VAT is claimed by the company clearing the goods through customs. This is the VAT that you can claim as input VAT, as an official invoice, with all your company details will be present.

    These invoices may be an issue entering into your accounting system, as the VAT charged is not a 15% (current percentage) of the clearing fees charged by shipping companies, but a value relating to the local value in Rands calculated on the imported cost.
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    Actually since 1 April 2019 the sale of electronic goods and services does attract VAT, in most jurisdictions. I am not sure about the tax invoice issue though.

    It might have been earlier, I am not sure. See https://mybroadband.co.za/news/gover...-software.html

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    Diamond Member Justloadit's Avatar
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    From the article, it seems that the foreign company providing the service must register locally as a VAT vendor if a sale exceeds R50K.
    Not sure if the foreign company is going to be happy to this. Depends on how much bottom line sales to RSA will produce. It may be that it is not worth the time and effort, placing local customers in a bit of a predicament if they do not wish to supply because of the VAT requirement.
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    Quote Originally Posted by Andromeda View Post
    I am not sure about the tax invoice issue though.
    Google does produce a valid tax invoice...

    It's not a uniquely South African thing. The world seems to be heading towards taxation based on the location of the client rather than the location of the supplier, so I expect the larger players will all adapt. I predict many of the smaller players will probably adapt too.
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    The South African Revenue Service (SARS) expanded the list of electronic services provided by non-resident suppliers subject to Value-Added Tax (VAT). As a result, Intuit Limited, providers of QuickBooks, will become a VAT registered entity in the Republic of South Africa.

    Starting on your next bill date on or after 01 September 2019, we will be required to collect 15% value-added tax (VAT) on your QuickBooks Online subscription. VAT charges are collected by Intuit on behalf of the government and as such, should not be considered as a price increase.

    For more information, see the press release at smesouthafrica.co.za.

    What should I do?
    Right now, you don't need to take any action in QuickBooks. We'll send you a follow up email with information on how to enter your VAT registration details.

    If your business is registered for VAT, you may be able to claim back the full VAT amount when you file your VAT return. You may also wish to notify your clients and assist them with the process of becoming VAT registered, if they are not already. For more information on how to become VAT registered, visit sars.gov.za.

    Thank you for using QuickBooks Online.

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    Thanks for all the help!

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