This research identified that e-commerce is growing annually and has a significant impact on the
South African economy. When the Minister of Finance announced that VAT registration would
become compulsory for foreign suppliers importing e-commerce transactions into South Africa,
there were many speculations regarding the implication this will have for South Africa.
The main objectives for the research are to determine whether the current VAT structure and
VAT Act in South Africa will be able to support the proposal made by the Minister of Finance
and what possible challenges should be considered regarding VAT on e-commerce transactions
that were already identified by other countries. It will further be considered whether the proposal
is in line with current international legislation and trends.
Therefore, the development and implementation of VAT on e-commerce transactions in the
European Union and New Zealand were researched and discussed to obtain an understanding of
the similar current VAT systems in other parts of the world. It was identified during the research
that there are still challenges experienced with the implementation of VAT on e-commerce
transactions. The challenges range from the anonymity of the parties to the identification of the
permanent establishment of the supplier, which are discussed in detail. These challenges can lead
to tax evasion and the erosion of a country’s revenue base. The proposal by the Minister of
Finance is found to be in line with other countries’ implementation of VAT on e-commerce
transactions.
Furthermore, South Africa’s current VAT system was analysed to ascertain whether it is
sufficient to implement VAT on e-commerce transactions. Currently, SARS is dependent on the
consumer’s honesty to declare the VAT on all e-commerce transactions. It was further identified that there are challenges relating to the implementation of VAT on ecommerce
transactions as it is lacking place of supply rules, which often creates uncertainty
about whether a product is subject to VAT.
It was found in the study that the current VAT system would not be sufficient to support the
proposal made by the Minister of Finance without an amendment to the VAT system to secure
the income from the consumption tax on e-commerce transactions. It was further found that there
are worldwide still challenges experienced with the implementation of VAT on e-commerce
transactions. Recommendations were made for further research relating to the new Tax Bill that
is due to be released in 2014 and the impact it will have on the South African economy. / MCom (South African and International Taxation), North-West University, Potchefstroom Campus, 2014
| Identifer | oai:union.ndltd.org:NWUBOLOKA1/oai:dspace.nwu.ac.za:10394/13075 |
| Date | January 2014 |
| Creators | Fryer, Elani |
| Source Sets | North-West University |
| Language | English |
| Detected Language | English |
| Type | Thesis |
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