31 October 2025 – The newly developed “Supply of Electronic Services by Foreign Suppliers and Foreign Intermediaries” external guide has been updated to align with the legislative amendments. Any queries relating to Foreign Suppliers of Electronic Services and Foreign Intermediaries must be referred to the Large Business and International (LBI) service centre.
The update includes the following details:
- Section 23(2)(a) and section 46(2) of the Value-Added Tax Act were amended, with effect from 24 December 2024, to allow for the appointment of a natural person who is a non-resident of the Republic as a representative vendor for a Foreign Supplier of Electronic Services or Foreign Intermediary.
- A new proviso has been added to section 23(2) of the VAT Act stipulating that a foreign enterprise will not be required to open a South African (SA) bank account, provided that the enterprise resides in countries that have a Double Taxation Agreement (DTA) with SA in terms of section 108(2) of the Income Tax Act or section 75(2) of the VAT Act. However, section 23(2)(b) of the VAT Act shall not apply in the following circumstances:
- If a company, is an “external company” defined in section 1 of the Companies Act (2008), and it does not have a fixed or permanent place of business in SA;
- If a natural person is physically present in SA for a period less than an accumulated period of six months in any period of 12 months;
- If the person is defined as an “enterprise” in terms of paragraph (b)(vi) of section 1 of the VAT Act.
- Furthermore, where the non-resident of SA no longer complies with the requirements of the provision to section 23(2B) of the VAT Act, normal rules for the representative vendor and banking details must apply with effect from the date of such non-compliance, where such date is after 24 December 2024.
- The definition of “electronic services” was amended in section 1(1) of the VAT Act to include electronic agent, electronic communication or internet.
- A new definition of “content” was added to section 1(1) of the VAT Act.
- The updates also highlight that a credit for a Foreign Supplier of Electronic Services will not be refunded; it is offset against future VAT liabilities. However, where a Foreign Supplier of Electronic Services is deregistering for VAT in SA, any credit will be refunded to the foreign bank account of that Foreign Supplier of Electronic Services.
Updated guide: VAT-REG-02-G02 – Supply of Electronic Services by Foreign Suppliers and Foreign intermediaries – External Guide
