Updated VAT Guide for Foreign Electronic Service Providers

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If you’re working with foreign clients supplying digital services to South Africans, take note: SARS has updated its VAT Guide for Foreign Electronic Service Providers, effective 31 October 2025. The guide outlines what’s required when a non-resident sells services like streaming, e-learning, software, or cloud products to consumers in South Africa. With these latest amendments, SARS is tightening definitions while offering some welcome admin relief.

What’s New in the Guide?

1. Expanded and Refined Definitions

• “Electronic Services”
  The definition now includes all services supplied by means of an electronic agent, communication, or internet, unless explicitly excluded.
  This broadens the scope to ensure that new digital products and platforms are captured.

• New definition of “Content”
  Refers to any digital information (sound, image, data, or signal) that forms part of the service offering.
  This helps classify streamed and downloadable services more clearly.

2. Temporary Threshold Relief Introduced

A foreign supplier who exceeds the R1 million VAT threshold due to temporary, abnormal circumstances (e.g. a once-off large sale or spike in usage) is not automatically required to register. SARS will assess whether the increase was truly abnormal and temporary, providing some flexibility to smaller players or startups.

3. Local Bank Account Not Always Required

Previously, foreign suppliers had to open a South African bank account to register and comply. Now, if the supplier is located in a country with a Double Taxation Agreement (DTA) with South Africa, this requirement may be waived. This reduces the administrative burden and banking costs for foreign vendors.

4. New Flexibility in Appointing Representative Vendors

A non-resident can now appoint a representative vendor who is also non-resident, as long as they meet certain criteria set by SARS. This opens the door for more practical, global compliance structures for multinational firms.

5. Currency Conversion Clarity

Foreign suppliers who invoice in a non-ZAR currency must convert values using approved sources:

• South African Reserve Bank (SARB)

• Bloomberg

• European Central Bank (ECB).

This ensures accuracy and consistency in VAT calculations and payment reporting.

6. Document Clarifications and Presentation Updates

The guide includes improved layout, updated examples, and emphasis on compliance steps, such as:

• What documentation is required for VAT registration

• Correct email format and submission guidelines

• The use of SWIFT MT103 messaging for international payments.

Key Compliance Reminders

• VAT registration is compulsory once the R1 million threshold is met (over any 12-month period).

• Registration is done via email using form VAT101 (with supporting documents).

• Monthly VAT returns must be filed through eFiling.

• Payments must be made using SWIFT MT103 via FNB, including the correct PRN.

Why It Matters

Whether you’re advising global clients or managing VAT for cross-border e-commerce:

• These rule changes impact who registers, how they invoice, and how they pay.

• The guide now offers more clarity, flexibility, and updated definitions to help navigate compliance without surprises.

• Expect increased enforcement — SARS is watching digital transactions closely.