Guide to Supply of Electronic Services by Foreign Suppliers and Foreign Intermediaries

Summary

This webpage is applicable to the supply of electronic services by Foreign Suppliers and Foreign Intermediaries and explains how to:

Complete the Value-Added Tax Registration Application – VAT101 (VAT Application Form)
Complete the Vendor Declaration (VAT201)
File the VAT201 and make payment of the VAT, and
Request for a VAT registration to be cancelled, where the value of electronic services supplied has not exceeded the R1 million threshold in a period of 12 months.

General Information

Effective from 1 June 2014, Foreign Suppliers of electronic services were required to register for VAT in South Africa (SA) where the total value of electronic services supplied in SA exceeded R50 000.
The requirement to register for SA VAT was based on the following provisions in the VAT Act:

A definition of “electronic services” was introduced in section 1(1) of the VAT Act and means those services prescribed by the Minister of Finance by Regulation, as set out in the VAT Act.
The afore-mentioned Regulation was published in Government Notice No. R.221 which came into operation on 1 June 2014 (referred to as the Original Regulation).

The definition of “enterprise” in section 1(1) of the VAT Act, was amended to include the following:

The supply of electronic services by a person from an export country where two of the following criteria are met:

the recipient of the electronic services is a resident of SA; or
the payment to the foreign supplier of electronic services originates from a bank registered or authorised in terms of the Banks Act. No. 94 of 1990; or
the recipient of the electronic services has a business, residential or postal address in SA.

A new section 23(1A) was introduced, where Foreign Suppliers of electronic services were mandated to register, if the value of electronic services supplied in SA exceeded R50 000 (compulsory registration threshold).

Effective from 1 April 2019, further changes, as set out below, were made to the VAT Act:

The Original Regulation was amended by Government Notice No. 429. This broadened the scope of services which qualified as “electronic services”.
The definition of “enterprise” in section 1(1) of the VAT Act was also broadened to include the activities of an “intermediary”.
Accordingly, a new definition of “intermediary” was inserted in section 1(1) of the VAT Act, to mean a person who facilitates the supply of “electronic services” made by a Foreign Supplier of electronic services and who is responsible for issuing the invoices and collecting payment for such supply.
The compulsory registration threshold, in section 23(1A) of the VAT Act, was increased to R1 million (effective 1 April 2019) and also applied to an “intermediary”.

Effective from 5 January 2023, another change, to section 23(1A) of the VAT Act, was made. This change is to ease the administration burden for Foreign Suppliers of electronic services and Foreign Intermediaries, by introducing an exception when calculating the R1 million threshold. The exception being, if a Foreign Supplier of electronic services or a Foreign Intermediary exceeds the R1 million threshold, in any consecutive period of 12 months, solely as a consequence of abnormal circumstances of a temporary nature, such Foreign Supplier of electronic services of Foreign Intermediary shall not be liable to register for SA VAT.

VAT is levied at the standard rate of 15% on the supply of “electronic services”, effective from 1 April 2018. The standard rate of 14% was applicable until 31 March 2018.
A Foreign Supplier of electronic services or a Foreign Intermediary that makes a supply of electronic services reflecting the value of electronic services in the currency of any country other than SA, that Foreign Supplier of electronic services or Foreign Intermediary must convert the value to the currency of SA. The exchange rate that must be applied is the rate as published by either one of the following three sources:
- The South African Reserve Bank (www.resbank.co.za);
- Bloomberg (www.bloomberg.com); or
- The European Central Bank (www.ecb.europa.eu).

One of the following three options must be used to determine the applicable exchange rate:

Daily exchange rate;
Daily exchange rate on the last day of the month; or
Monthly average rate for the month.

Registration Process

Registration for SA VAT must be done by downloading the Value-Added Tax Registration Application (VAT101) form that is available on the SARS website.

Complete the VAT101 in English and attached the supporting documents. To access the list of supporting documents, click on Relevant Material or Supporting Documents I South African Revenue Service (www.sars.gov.za).Supporting documents that are not in English must be translated into English before attaching them as supporting documents to the VAT101.

Should you experience any difficulty in completing the VAT101 you are welcome to contact SARS on 080 000 7277 and select option 3, or at [email protected]

After completing and signing the VAT101, email it together with the supporting documents to SARS at [email protected]

The Commissioner will process the VAT101, together with the supporting documents and determine the date from which a Foreign Supplier of electronic services or a Foreign Intermediary is required to commence charging SA VAT at the standard rate.

Instruction for Completing The VAT Registration Application
(VAT101)

Note: Before completing the VAT101 please read the following instructions.
Print clearly, using blue or black ink only.
Use BLOCK LETTERS and print one character in each block. Example:

Place an X in the relevant choice blocks.

‘CCYYMMDD’ format is CC the century, YY the year, MM the month and DD the day in the month.

Any alterations on the VAT101 must be initialled by the applicant/representative handling the VAT affairs
of the applicant.

The applicant/representative handling the VAT affairs of the applicant is obliged to make a full and
accurate disclosure of all relevant information on the VAT101.

A Foreign Supplier of electronic services or a Foreign Intermediary is required to register on eFiling.

eFiling registration will enable the Foreign Supplier of electronic services or the Foreign
Intermediary to file VAT201s and make VAT payments from outside SA.
For more information on how to register on eFiling, please visit www.sarsefiling.co.za

Once the application for VAT registration has been successfully processed, you will receive a Notice of
Registration.

SARS employees are not allowed to verbally confirm your VAT registration number, and if a VAT
registration number has been allocated, the SARS employee will provide confirmation thereof by issuing
a Notice of Registration.

Taxpayer Information

Note: This part requires details of the person requesting registration for VAT.

Applicant Details – Individuals

Complete the fields in this container only if the business is conducted by an individual i.e. a natural person.
For entities other than individuals, the Applicant details – Individual container must be left blank. DO NOT write ‘not applicable’ or ‘n/a’

Nature of entity

The ‘Foreign electronic service entity’ block must be marked with an ‘X’.

Note: A Foreign Intermediary is required to make use of the “Foreign electronic service entity” block on the VAT101.

Surname

Complete the Surname if the nature of the entity is an individual.

First name/Other name

Complete the first name in the applicable blocks. If there is more than one name for the individual, additional names must be completed on the blocks next to ‘Other Name’

Initials

Insert the initials of the individual in the blocks provided, for example: If my name is Maggi Sidney Naidoo, my initials would read

Date of Birth

Where the nature of person is an individual, insert date of birth (‘CCYYMMDD’ format).

Passport/Permit Number

For an individual (not a SA citizen), complete the individual’s passport/permit number).

Passport Country/Country of Origin

It is a country of origin or a country from which the passport was issued.

Passport/Permit Issue Date

For an individual (not a SA citizen), insert the date (‘CCYYMMDD’ format) the passport or permit was issued.

Applicant Details – Company/Trust/Partnership and other Entities

The fields in this container must only be completed if the activities of the Foreign Supplier of electronic services or Foreign Intermediary are conducted by a person other than a natural person, e.g. a Company etc.

Nature of entity

The ‘Foreign electronic service entity’ block must be marked with an ‘X’.

Note: A Foreign Intermediary is required to make use of the “Foreign electronic service entity” block on the VAT101.

Company/CC/Trust Reg No. (Registration Number)

The registration number is not applicable and may be left blank if the Nature of Entity is a “Foreign electronic service entity”.

Registered Name

The business or organisation name that appears on all official / legal documents must be inserted.
Registration is based on the registered name and not the trading name.
Record the name of the entity registered with the applicable registration authority.

Trading Name

The trading name is the name under which your business trades. It is commonly the name known by the suppliers or customers and it may be different from your business registered name.
If the trading name is the same as the legal name, rewrite the name. DO NOT write ‘as above’, ‘not applicable’ or ‘n/a’

Main Industry Classification Code

Please insert code “3455” in this field

Registration Date

It is a date in the format (‘CCYYMMDD’) where the value of electronic services supplied by the Foreign Supplier of electronic services exceeded R50 000, for the period 1 June 2014 to 31 March 2019 and where the value of electronic services supplied by the Foreign Supplier of electronic services or Foreign Intermediary exceeded R1 million, for the period 1 April 2019 onward.

Financial Year End

The financial year end is usually the last day of February (e.g. 02), however it can be any month of the year for other entities. The details must be completed in the format ‘MM’ in the applicable block.

Country of Registration

It is a country where the entity is registered.

Applicant Info

Record the preferred language in the blocks provided. The preferred language is English.
To indicate the status of the applicant, place an “X” in the applicable block.

Contact Details

Complete the email address of the Foreign Supplier of electronic services or Foreign Intermediary in the blocks provided.

Physical Address Details

The particulars refer to the address of the Foreign Supplier of electronic services or Foreign Intermediary situated outside SA.This means that the foreign physical business address must be completed under the relevant fields.
Indicate on the applicable tick box by placing an “X” to confirm that the information provided is true and correct in the ‘Registered Physical Address’.

Postal Address Details

Place an “X” in the first block if the postal address is same as the physical address.
Answer the question “Is your Postal Address a Street Address” Select “Y” for yes and “N” for no.
The “Postal Address Details” must only be completed if the Foreign Suppliers of electronic services or Foreign Intermediary receives post/mail via a Postal Box.
If the post is received at the physical business address, complete the relevant fields.
Indicate on the applicable tick box by placing an “X” to confirm that the information provided is true and correct in the ‘Registered Postal Address’ field.

Particulars of Representative Taxpayer

The representative taxpayer refers to the “representative vendor”, as defined in the VAT Act.
A Foreign Supplier of electronic services or a Foreign Intermediary is not required to appoint a representative vendor in SA.
However, in order for your registration application to be processed, complete the particulars of the representative handling the VAT affairs of the Foreign Supplier of electronic services or the Foreign Intermediary, under “Particulars of Representative Taxpayer” on the VAT101
An intermediary, being a resident of SA, must appoint a natural person residing in SA as a representative vendor.

Particulars of Partners / Members / Directors / Trustees

Note: This section in not applicable to a Foreign Supplier of electronic services or a Foreign Intermediary.

My Addresses

The “Postal Address Details” container must be completed.
Mark the first block with “X” if the postal address is same as the physical address.
Answer the question “Is your Postal Address a Street Address” Select “Y” for yes and “N” for no.
Mark the last block with “X” if it is a Care Of address.
Indicate on the applicable tick box by placing an “X” to confirm that the information provided is true and correct in the ‘Registered Postal Address’ field.
Indicate on the applicable tick box by placing an “X” to confirm that the information provided is true and correct in the ‘Registered Postal Address’ field.

My Bank Accounts

A Foreign Supplier of electronic services or a Foreign Intermediary is not required to open a SA bank account.
However, an intermediary being a resident of SA will be required to open a bank account with any bank, mutual bank or other similar institution registered under the Banks Act for the purpose of the enterprise carried on in SA.

VAT

Complete the following details:

Liability date

This date (‘CCYYMMDD’ format) refers to the date the Foreign Supplier of electronic services or a Foreign Intermediary becomes liable to be registered for SA VAT.
In terms of the VAT Act, this date cannot be a date before 1 June 2014.

Business Activity code

Please insert code ‘3455’ in this field.

Financial Particulars

The financial information to be provided in this part, is required to determine the following details:

The financial status of the enterprise to determine if the value of the electronic services supplied to recipients in SA exceeds R1 million or exceeded R50 000 for the duration of the period starting from 1 June 2014 to 31 March 2019.The accounting basis to be used by the Foreign Supplier of electronic services or Foreign Intermediary. Accounting for VAT can either be done by using the invoice basis or the payment basis. For a distinction between the two methods please refer to Chapter 4 of the VAT 404 Guide for Vendors.
A record of all services supplied by the Foreign Supplier of electronic services or Foreign Intermediary, this includes for example, all tax invoices, credit and debit notes, bank statements, deposit slips etc.
A Foreign Supplier of electronic services or Foreign Intermediary must keep records for five years.

- The records may be kept in electronic form. Records maintained in electronic form must be physically located in SA. Approval may however be granted to allow the retention of the electronic documents at a location outside SA, subject to certain requirements. Refer to Public Notice 787 of 1 October 2012 for more detail.

Value of Taxable Supplies

This field refers to the value of electronic services supplied to a recipient in SA. In this regard, insert the Rand value of the electronic services in the ‘Standard rated supplies’ field. The other fields under the ‘Total Value of Supplies’ container is not applicable.
For accounting basis, mark an “X” on the applicable option “Payment” or “Invoice”

Tax Periods

A monthly tax period or a two monthly tax period is available for a Foreign Supplier of electronic services or a Foreign Intermediary. A ‘Monthly tax period’ is preferred, therefore place an ‘X’ alongside the ‘Monthly tax period’ field.

Diesel Refund

This container is not applicable to a Foreign Supplier of electronic services or a Foreign Intermediary.

Particulars of Tax Practitioner

The Tax Practitioner Details are not required for a Foreign Supplier of electronic services or a Foreign Intermediary.

Declaration

This container requires the signature of the representative handling the VAT affairs of the Foreign Supplier of electronic services or Foreign Intermediary and must be the same person as indicated in the ‘Particulars of Representative Taxpayer’ container.
Once you have completed the VAT101, you are required to read the declaration. When the representative handling the VAT affairs is satisfied that all the information provided in the VAT101 is accurate and complete, the VAT101 must be signed and dated in addition to recording the name and capacity of the representative handling the VAT affairs of the Foreign Supplier of electronic services or Foreign Intermediary.
No Power of Attorney will be accepted for purposes of signing the VAT101. It must be signed by the representative handling the VAT affairs of the Foreign Supplier of electronic services or Foreign Intermediary.

Submission of the Vendor Declaration (VAT201)

The VAT201 must be filed, and the payment must be made by the last business day of the month after the end of the tax period applicable to the Foreign Supplier of electronic services or Foreign Intermediary.

For example, if the tax period ends on 30 June 2014, if registered on Category C (monthly tax period), the Foreign Supplier of electronic services or Foreign Intermediary has until 31 July 2014 to file the VAT201 and make payment.
Note that if the due date for payment is on a Saturday, Sunday or public holiday, the VAT201 and the payment must be submitted timeously so that it is received by SARS by no later than the last working day before that date.
Failure to pay the SA VAT within the prescribed period will result in penalty and interest being imposed by SARS.
For ease of reference, the date by which the VAT201 must be filed and SA VAT paid to SARS is reflected on the VAT201.

The VAT201 will be made available for completion and submission by the Foreign Supplier of electronic services or Foreign Intermediary, using eFiling.

Completion of the VAT201

Request VAT201 for the relevant tax period using eFiling channel, and select “REQUEST FORM” option

Complete all the relevant information that is required for the processing of the VAT201.

The form will be pre-populated with the following information:

Trading or Other Name
VAT Registration Number
Tax period for which the declaration is to be made.
Payment Reference Number (PRN)

Vendor Details

Note: All these fields are pre-populated. If the details are not pre-populated, please populate them.

Trading or Other Name

The name under which the Foreign Supplier of electronic services or Foreign Intermediary conducts its business. If the trading or other name has changed, and if this field is already pre-populated, you are required to inform SARS in writing. This must be done by sending an email to [email protected]

VAT Registration Number

The VAT registration number is the 10-digit number allocated by SARS in the Notice of Registration.

Customs Code

This field is not applicable to a Foreign Supplier of electronic services or Foreign Intermediary.

Tax Period (CCYYMM)

This period is the period for which the VAT201 must be submitted depending on the filing and payment category allocated to the Foreign Supplier of electronic services or Foreign Intermediary.

Contact Details

Complete the following mandatory demographic information of person responsible for completing VAT201:

First Name
Surname
Capacity
Business Telephone Number
Fax Number
Cell phone Number
Contact Email: This is an optional field and may be completed. This field must be completed in BLOCK LETTERS and insert one character per block.

Either the business telephone or cell phone number must be provided.

The business telephone number must commence with the relevant area code. If the business number is not provided, the cell phone number is a mandatory field.

Declaration

The electronic signature (i.e. the vendor’s log in) associated with an eFiler is deemed to be the signature of the declarant.

Note: Please note that a PRN will be pre-populated on the VAT201, which must be used when making payment of the VAT.

Calculation of Output Tax and Imported Services

Note: Please note that the calculation of imported services is not applicable to a Foreign Supplier of electronic services or a Foreign Intermediary.

Complete fields 1, 4 and 13 only.

Field 1 must be completed by inserting the Rand value of electronic services supplied to a recipient in SA. This amount will be inclusive of SA VAT charged at the standard rate.
Field 4 refers to the SA VAT amount, it is programmatically calculated based on the amount declared in field 1.
Field 13 is the sum total of fields 4, 4A, 9, 11 and 12. The amount in field 13 will therefore be the same amount disclosed under field 4.

Calculation of Input Tax

Complete the relevant fields under this container if the Foreign Supplier of electronic services or Foreign Intermediary was charged SA VAT at the standard rate on the acquisition of goods or services for purposes of making supplies of electronic services, to recipients in SA.

Complete fields 14 to 18, whichever is applicable, by inserting the amount of the SA VAT charged to the Foreign Supplier of electronic services or Foreign Intermediary.
Field 19 is the sum of fields 14 to 18.

Field 20 is the difference between fields 13 and 19 and is therefore the net amount of SA VAT that must be paid to SARS in accordance with the filing and payment method described below.

Payment Details: This field is not applicable

Refund Details: This field is not applicable

The Payment Method

Use the SWIFT MT103 payment method. The turnaround time when using this payment method is dependent on the initiating bank payment service.

Example of a completed SWIFT 103 message format:

Taxpayer Name : XYZ Services (situated in the USA)

VAT Tax Reference Number : 4999999999

Period Payable : July 2014

Amount Payable : R 50,374-61

Effective Payment Date : 20 August 2014

19 digit payment reference : 4999999999V00072014 (provided by SARS

Use the following tax reference number and banking details to apply the SARS payment rules:

19 digit payment reference : 4999999999V00072014

SARS Bank Account / ID : SARS-FOR-999

Financial Institution : First National Bank Ltd, SWIFT Address: FIRNZAJJ

These fields would appear in the SWIFT 103 message as follows:

Note that the above is only an example. When making a payment it is imperative that the correct unique PRN is quoted to ensure the payment is easily identified and correctly allocated. Do not use the PRN provided in the example.

SARS’ foreign payments are administered solely by the First National Bank (FNB). Any queries regarding the completion of the SWIFT 103 message should be directed to the FNB call centre on 08601 FOREX (08601 36739).

Cancellation of Vat Registration

A Foreign Supplier of electronic services or Foreign Intermediary may apply to cancel their VAT registration, where the total value of electronic services supplied to SA recipients did not exceed the R1 million threshold within a 12-month period, or R50 000 for the period starting from 1 June 2014 to 31 March 2019.

The request to cancel a VAT registration together with the information listed below must be emailed to: [email protected]

In instances where the Foreign Supplier of electronic services or Foreign Intermediary has not exceeded the R1 million threshold within a 12-month period or R50 000 for the period starting from 1 June 2014 to 31 March 2019, the request to cancel a VAT registration must consist of the following information:

Legal name of the entity.
VAT registration number of the entity.
The date at which the cancellation of registration is to be effected.
A declaration that the cancellation of registration request is as a result of the value of taxable supplies (value of electronic services supplied to recipients in SA) not exceeding the R1 million threshold in a period of 12 months (or R50 000 for the period starting from 1 June 2014 to 31 March 2019).
Financial records of the Foreign Supplier of electronic services or Foreign Intermediary, certified by an accountant or auditor, confirming that the value of taxable supplies (value of electronic services supplied to recipients in SA) made in a 12 month period has not exceeded the R1 million threshold (or R50 000 for the period starting from 1 June 2014 to 31 March 2019).

Kindly note that the cancellation a VAT registration will not be effected where there are outstanding

VAT201(s) and/or VAT payment(s).

A Foreign Supplier of electronic services or Foreign Intermediary must continue charging VAT on its supplies, filing VAT201s and making payments of VAT to SARS, even if it has submitted a request to have its registration cancelled. SARS will communicate to the Foreign Supplier of electronic services or Foreign Intermediary as to its last tax period for which a VAT201 must be filed and the VAT that was charged, in respect of that tax period, must be paid.

Definitions, acronyms and abbreviations

The definitions, acronyms and abbreviations can be accessed via the following link: Glossary webpage.

Legal disclaimer: In the event of conflict or inconsistency between this webpage and the PDF version of the guide, the latter shall prevail.

Last Updated:

20/11/2023
11:51