Digital tax and SARS
People who purchase digital goods and services from South Africa are not in danger of being penalised by the South African Revenue Service (SARS) if the seller is not VAT compliant.
This is according to Gerard Soverall, a tax specialist and partner at PricewaterhouseCoopers (PwC) in South Africa.
In a webcast arranged by PwC, Soverall said that the onus is on the seller to collect value added tax (VAT) and pay it over to government.
There is no legal mechanism for SARS to chase the recipient of digital goods or services for tax, Soverall said.
Asked how companies would be required to determine when to collect South African VAT from a patron, the tax expert said that it would essentially come down to two questions:
- Are you a resident of South Africa; and
- Are you making a payment from a South African bank account?
Responding to a question on what SARS might do to companies that elect not to become SA VAT-compliant, Soverall said that they still don’t know how SARS intends to force compliance.
He said that, from an international perspective, they know it is an incredibly difficult thing to police.
Soverall speculated that perhaps SARS will make use of the lines of communication between the various national treasuries around the world.
Something else that might drive larger companies to become compliant is the “shame factor”, Soverall said.
He argued that large companies, such as Amazon and Apple, are not likely to walk away from their compliance obligations because of the risk of being “tax-shamed” as they have been on their so-called tax avoidance schemes.
This article first appeared on MyBroadband
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