Simon Leps, CEO of Fontera Digital Works, says that the new digital tax in South Africa will negatively affect consumer\u2019s pockets and therefore restrict their freedom of choice.<\/p>\n
The new electronic services regulations published by the South African Treasury, Electronic Services Regulations in January, will introduce 14% VAT on digital products and services, such as e-books, music and other digital goods, sold by foreign businesses.<\/p>\n
The commencement date of the regulations is set for 1 June 2014.<\/p>\n
According to Leps, this regulation will increase the cost of digital content.<\/p>\n
\u201cThe new VAT law is knee jerk reaction to a small amount of local publishers who feel that they are unable to compete with pricing from overseas retailers.”<\/p>\n
“The result will be that South African consumers\u2019 pockets will be hit hard, especially with the rand recently hitting its lowest slump in five years.<\/p>\n
“If VAT is added onto the purchase price of online goods from overseas it will increase the price by more than 50% thereby making the VAT on digital goods a double whammy,” Leps said.<\/p>\n
New digital tax implementation date<\/strong><\/a><\/p>\n Why digital tax is good for South Africa<\/strong><\/a><\/p>\n