VAT on Digital Products and Electronic Services in South Africa

Digital products can raise VAT questions

Online courses, downloads, apps, subscriptions, advertising, software access and other internet-based services can raise VAT questions. The answer depends on whether the supply is taxable, where the supplier is based, who the customer is and whether South African VAT registration rules apply.

Electronic services concept

SARS electronic-services guidance describes electronic services broadly as services supplied remotely by electronic means, such as through the internet or telecommunications services. The rules have changed over time, so use the current SARS guidance for the period involved.

South African vendors

A South African business selling digital products should check the normal VAT registration thresholds, whether supplies are taxable, and whether any zero-rated or exempt treatment applies. VAT records should clearly connect online platform reports to VAT201 totals.

Foreign suppliers

SARS guidance has separate rules for non-resident suppliers of certain electronic services and foreign intermediaries. Foreign suppliers should check the current electronic-services guide and registration threshold rules before assuming South African VAT does not apply.

Records to keep

• Platform sales reports and payout statements.
• Customer location and customer type information where relevant.
• Invoices, credit notes and refund records.
• Exchange-rate working papers for foreign currency transactions.
• VAT treatment notes for each product or service type.

Sources to verify

Primary SARS references: SARS FAQs on supplies of electronic services, SARS electronic services VAT registration note, and SARS register for VAT guidance.