Friday, November 30, 2018

Tax changes for Netflix South Africa, Facebook and Google who will have to pay VAT from April 2019 with the cost to be passed to end-consumers.

Multinational online companies operating their services in South Africa like Netflix South Africa, Facebook and Google will be compelled to register in South Africa for value-added tax (VAT) in 2019 and pay VAT, which could have an impact on their pricing, for instance Netflix.

Netflix on Friday told TVwithThinus that "Netflix is already paying VAT in South Africa".

National Treasury published new regulations for electronic services and changed the definition to "any services supplied by means of an electronic agent, electronic communication or the internet for any consideration".

The result is that places like Netflix South Africa will be subjected to registering for VAT if they haven't yet, and will have to pay 15% VAT in South Africa. The changed regulations are due to be implemented from 1 April 2019.

Similar to the recent sugar tax where the cost is being shifted to the end-consumer as Coca-Cola and other shrink cans and McDonalds blatantly pass on the added cost as an add-on to meal orders, the VAT addition will mean that consumers using certain online services will be charged more to use it.