Ministry of Finance Regulations No. 5993, dated 14 March 2025, introduce significant changes to the definition of “electronically supplied services” for VAT reporting purposes.
These changes are effective from 1 April 2025 and affect foreign digital service providers selling to South African customers.
The changes impacting Foreign Digital Service Providers are as follows:
B2B Supplies
- If a foreign supplier sells exclusively to VAT-registered South African businesses, VAT registration in South Africa is no longer required.
B2C Supplies
- Sales to non-VAT-registered customers (e.g., individuals, small businesses, schools) still require VAT registration.
Mix of B2B and B2C Supplies
If a non-established supplier makes both B2B and B2C supplies:
- VAT liability will apply to both types of supplies.
- Both B2B and B2C supplies will be considered when determining if turnover exceeds the VAT registration threshold.
Intergroup Supplies:
Intergroup supplies are not considered electronically supplied services subject to VAT if the following conditions are met:
- The supplier is non-established
- The customer is a business within the same corporate group
- The non-established company supplies electronic services it exclusively discovered, devised, developed, created, or produced for the South African resident company’s consumption
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