📌 Introduction

South Africa requires VAT at a standard rate of 15% on many forms of digital or electronic services delivered to RSA customers. These VAT rules apply to both domestic vendors and non-resident suppliers, and they began in 2014 with significant updates in April 2019 and April 2025.

If your digital product is automated, technology-dependent, and delivered online with minimal human intervention—such as streaming, gaming, or e‑books—you may be liable for VAT.

📂 What Counts as “Electronic Services”?

Definition & Criteria

As per the VAT Act and updated regulations, “electronic services” are those delivered by electronic agent, communication or the internet—and meet the following:

Depend on information technology
Are automated
Involve minimal human intervention

Common Examples:

Streaming music and videos (e.g., Netflix, Spotify)
Downloads: e‑books, images, music, films
E‑learning platforms, webinars, online courses
Online gaming and betting platforms
Internet-based auctions and marketplaces
Subscription services (membership, dating sites, SaaS)
Website hosting, apps, web apps, online ads

What’s Typically Excluded:

Telecommunications services
Educational services delivered by recognized foreign educational authorities
Intracompany services within the same corporate group

🌍 Who Must Register & Charge VAT?

Threshold Rules:

Non‑resident or resident suppliers must register as a VAT vendor if their electronic service turnover exceeds R1,000,000 in any consecutive 12-month period.
VAT invoices and returns must be issued—returns filed monthly or bimonthly based on turnover.

B2B vs B2C Rules (April 2025 Update):

From 1 April 2025, non-resident providers supplying only to South African VAT-registered businesses are excluded from VAT obligations.
If they sell to both registered and unregistered customers (including consumers), VAT applies to all supplies.

🧾 VAT Rates & Invoicing Requirements

The VAT rate is 15% on all taxable electronic services. There are no reduced or zero rates for digital services.
Invoices must contain:
- VAT amount in ZAR
- Supplier and recipient details (including VAT number for B2B)
- Description of the service
Foreign suppliers must collect sufficient customer data to apply the two-of-three destination rule: customer must have SA address, SA bank payment, or be RSA resident.

💻 Digital Services Subject to VAT in South Africa

If delivered by electronic means and automated, these services are generally taxable:

Streaming audio/video
Digital downloads (music, pictures, e‑books)
Online publications (journals, blogs, newspapers)
E-learning courses & webinars
Online gaming and wagering platforms
Internet auctions and digital marketplaces
Subscriptions (membership, dating sites, SaaS)
Hosting & web services, app stores, and online advertising platforms

🚧 Key Exemptions & Exclusions

Educational services delivered by foreign institutions regulated in their country are exempt, not taxed under electronic services definitions.
Intragroup services within corporate groups (70%+ equity control) for sole consumption may be excluded.
Post-April 2025: non-resident suppliers dealing only with VAT-registered vendors no longer qualify as supplying “electronic services.”

🧭 How to Determine VAT Liability: A Quick Guide

Define service nature: is it electronically supplied, automated, IT-dependent?
Check recipient type: B2B or B2C, VAT-registered or unregistered.
Apply destination principles: at least two of – SA address, SA bank payment, RSA resident status.
Exemptions apply? If so, confirm using exclusions list.
Registration threshold: have taxable digital supplies exceeded R1 million in the trailing 12 months?

❌ Common Pitfalls to Avoid

Misclassifying fully automated digital products as human-provided services.
Assuming B2B is exempt—under global changes, only fully B2B to VAT-registered businesses may qualify post-April 2025.
Poor data collection—failing to capture customer address or payment origin could invalidate destination test.
Incorrect invoices: missing VAT, wrong currency, or lacking recipient VAT number (for B2B) may breach SARS regulations.

✅ Practical Compliance Tips

Use VAT-compliant invoicing software to automatically handle currency, address, VAT fields.
Require digital platforms to collect customer location and payment origin data at signup.
Keep records for at least five years, including customer addresses and banking info.
Review supplier agreement terms if using intermediaries—ensure VAT liability clarity.
Monitor updates from SARS—especially around further exclusions or interpretations.

❓ Frequently Asked Questions (FAQs)

Q1: Are SaaS services taxable in South Africa?
Yes—software as a service is taxable at 15% if delivered electronically and consumed by South African recipients.

Q2: Do I need VAT registration if I only sell to businesses?
If only to South African VAT-registered businesses, non-residents may be exempt post-April 2025. Mixed supply to consumers or non-registered vendors triggers VAT registration if turnover exceeds threshold.

Q3: Can a marketplace platform be liable instead of the principal?
Yes—under intermediary rules, the marketplace may be responsible for charging and remitting VAT if it invoices customers for the digital supply.

Q4: Are educational webinars taxable?
Yes—unless provided by a foreign institution recognized as an educational authority. Otherwise they count as taxable e-learning services.

🏁 Final Thoughts

South Africa’s VAT regime treats most digital or electronic services as standard-rated supplies. Whether you’re a local or foreign provider of streaming, subscriptions, or e-learning, the obligation to register, invoice, and remit VAT applies once thresholds and criteria are met.

Which Digital Services Are Subject to South African VAT?