The National Treasury of South Africa issued the final regulations extending the definition of “electronic services” for value added tax (VAT) purposes. Under final regulations a foreign supplier will not be deemed to supply E-Services if the recipient of the services and the foreign supplier form part of the same group of companies and the recipient exclusively acquired the services for the purposes of consumption in South Africa. This final rule will be applicable from April 1, 2019.
The Finance Minister eliminated the specific types of services regarded as E-services and included any type of service supplied electronically in 2018 draft regulations. The only exclusions under the draft regulations were the supply of educational services by a person regulated by an educational authority in an export country and the supply of telecommunications services. But, in October 24, 2018, the Finance Ministry delivered the Medium Term Budget Policy Statement and released the final regulations defining E-services. The final regulations did not change from the draft regulations apart from an extra exclusion to provide relief to intra-group supplies.
