Last week MyBroadband reported that the National Treasury has pushed back the “go live” date of government’s plan to tax digital purchases to June 1.
MyBroadband says the move was first announced on the Treasury’s website in January 2014 and comments were requested on the legislation by 20 February 2014. The plan is that all digital purchases will be subject to South Africa’s 14% VAT, and that any company that makes their digital goods available to South Africans must implement the new tax rules on their side.
And yes, that means all of the games, software, music and movies you buy online that come from foreign countries will be 14% more expensive, in accordance with South Africa’s VAT rate. As if the (currently poor) exchange rate doesn’t screw us enough.
Essentially, the government believes millions of rands are going to foreign companies and they’re not getting their slice of the action, and this plan is being put in place to stop it. I do question, though, what “value” is being “added” here, because the way I see it we get absolutely sod-all for the extra money we’ll be expected to pay for our digital goods from June 1 – the government just gets more money from us. Literally.
Unfortunately, the delay doesn’t mean the plan isn’t proceeding. As of right now the digital tax plan will kick in on June 1st, and that’s probably not going to change.
If nothing else, the delay means a two-month respite, giving locals time to stock up on tax-free digital goods. But how, exactly, the government is going to force the likes of Valve (Steam), Apple, Microsoft, Sony and other purveyors of digital goods to comply is not known.
Let’s hope they don’t all just say stuff it, South Africa is too small a market for us to justify going through the schlep of implementing these new rules, so let’s just pull out altogether. That would suck.
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