Be Prepared - Your Digital Products will be Taxed from April 2014
These days, most of us use the internet for almost everything; whether it be online shopping, catching up on the news, research, learning, gaming or socialising – you name it and most people are doing it.
In 2013, South Africa’s Finance Minister, Pravin Gordhan announced that VAT will be imposed on e-commerce businesses who sell digital goods and services. As of 1 April 2014, this will become a reality. PWC’s Gerard Soverall made a statement that it had come to their attention that the government was losing out on a huge amount of VAT as a result of large online retailers’ success.
The VAT on digital products will be South Africa’s standard VAT percentage of 14% and it applies to everyone who supplies electronic services – imported andlocal goods.
At least there seems to be a somewhat silver lining for consumers, as electronic goods and services purchased online will still be cheaper than if they were bought at a shop; even with the new value added tax.
So, what exactly will be taxed? Be prepared, the list is a long one.
What will be taxed?
Perhaps something that may affect most of us, is that online content will be taxed. This includes e-books, films (in fact, video footage of all kinds), images, music (consisting of anyaudioclip, ring tone, jingle, song etc.), software and their updates and the list goes on.
Another one affecting many people out there will be subscription services being taxed too. These subscriptions include blogs, journals, magazines, newspapers, websites, games and social networking services – to name a few.
Even educational services will be taxed such as webinars, online courses and open distance learning.
All you gamers out there, you haven’t been left out either. Online games, interactive games, multi-player games and electronic betting will all be subject to VAT too!
Other digital services to be taxed are internet-based auctions, maintenance services (includes maintenance of websites, blogs etc.), and information system services.
Digital products being taxed may have little or no effect on some people, but for many businesses and consumers this may have a large impact on their online presence. Will this affect you in any way once it commences in April? Let us know how in the comment section below or even on our Facebook page.
See the National Treasury’s full list of digital goods and services that you will be taxed on here.