Developments in technology have created a global market place for consumers. Consumers
have the option of purchasing goods in a physical store or an online store. Consumers are no
longer limited to shopping at physical stores in their own jurisdiction and can shop online
from the convenience of their home. Consumers can acquire goods and services from any
country in the world. Online shopping provides consumers with a wide selection of goods
and services that may not be available in their own jurisdiction. Consumers favour
purchasing online since the goods and services acquired from foreign suppliers are usually
offered at better prices (price excludes VAT/GST). This creates an unfair advantage for
foreign suppliers over local suppliers.
The problem with selling a product to a consumer over the internet is that no physical
product crosses through any physical border post. These products are not physical goods
and are therefore referred to as services. Certain jurisdictions such as South Africa refer to
these services as electronic services. Electronic services are remotely supplied by foreign
suppliers to recipients resident in the Republic. Tax administrations lose revenue since there
are no border posts acting as agent to collect VAT/GST and remitting the VAT/GST to the
revenue authority. The foreign supplier would charge no VAT/GST on the supply and the
consumer will fail to self‐declare the VAT/GST to the revenue authority.
1 April 2014, National Treasury introduced electronic services which required foreign
suppliers of electronic services to register as vendors in the Republic. However, the
implementation was postponed to 1 June 2014 to allow foreign suppliers to update its
business systems. In 2015, further amendments were made to the electronic services
provisions. However, in 2015 the Davis Tax Committee issued the first interim report on VAT
to the Minister of Finance which highlighted concerns about the uncertainty and
inconsistency in the application of the electronic services provisions outlined in the
Regulations.
This study aims to analyse the supply of cross border electronic services in the Republic. Any
benefits and shortcomings will be assessed in a South African and international context. The
VAT Act is based on the New Zealand GST Act. The GST Act will be analysed to identify areas
of recommendation to improve the VAT Act, subject to the socio‐economic conditions in
South Africa. The BEPS Report and VAT/GST Guidelines will be analysed to identify how the
South African electronic services provisions have been adapted for a developing country
based on developed country principles.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uct/oai:localhost:11427/29826 |
| Date | 27 February 2019 |
| Creators | Schutters, Clint Charles |
| Contributors | West, Craig |
| Publisher | University of Cape Town, Faculty of Commerce, Accounting and Accountability in Africa |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Master Thesis, Masters |
| Format | application/pdf |
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