National Treasury has today published regulations that affect last year's amendments of the Value-Added Tax Act - a move which changes the way certain imported electronic services will be taxed in future.
The regulation was published in the Government Gazette today and National Treasury says its implementation has been postponed to 1 June "to allow businesses sufficient time to get their systems ready".
However, continues the statement, the South African Revenue Service (SARS) is ready to start registering foreign-based suppliers of electronic services from 7 April.
According to National Treasury, publication of the final regulation follows a consultation process undertaken after draft regulations were published.
Treasury says it received 50 written comments from business groupings, companies, private individuals, representative organisations and tax advisors.
The statement says SARS joined National Treasury in hosting a stakeholder workshop last month to discuss the comments, and businesses and tax advisors were concerned the scope of regulations was too wide as it included electronic services that are predominantly of a business-to-business nature.
Following consultation with stakeholders, National Treasury has reduced the scope to exclude certain e-services from the regulation.
"It should be noted that imported services not specifically included in the regulation are still subject to VAT in terms of section 14 of the Value-Added Tax Act," says National Treasury.
Treasury emphasised the amendments should not be interpreted as a new tax as the regulation "merely changes the tax liability from the importer of the service to the foreign supplier, to address concerns about non-compliance in terms of the current rules and to level the playing field between local suppliers of e-services and foreign suppliers".
In an effort to "reduce the compliance burden for businesses", National Treasury says SARS will provide a streamlined VAT registration and administrative process. Foreign electronic suppliers will not be required to open a bank account, the department says.
"Treasury and SARS are also reviewing the current applicable registration threshold. An increase in the registration threshold for foreign-based electronic service suppliers will be considered to ensure very small electronic service suppliers are not unduly impacted."
Treasury says it will initiate a consultative process "to develop a comprehensive paper on the treatment of electronic services, particularly in the area of financial sector regulation, payment systems and taxation, as well as to consider measures to better protect customers".
The final regulation is available on the National Treasury (www.treasury.gov.za) and SARS (www.sars.gov.za) Web sites.
Suggestions are welcomed and should be addressed to Ingrid.goodspeed@treasury.gov.za for more information.
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