NAG Online > News > Giblets: Buying games post-April? Breathe easier now!

Giblets: Buying games post-April? Breathe easier now!

The proposed 1 April 2014 start date for the taxation of digital goods has been postponed to 1 June 2014. The draft regulations were the source of all the agony over the initial implementation date but today Finance Minster Pravin Gordhan published the final proposed regulations in the Government Gazette. This gives the public extra time for comment although its unlikely that treasury will back down on such a lucrative source of income.

For those of you not familiar with it yet, the new tax law applies to digital goods and services bought on the internet and adds 14% VAT to the final price. Although this encourages companies to register with SARS as VAT vendors in the country, most will decline to register and thus the local banks will be tasked with adding on the VAT once your purchase clears through your credit or debit card. The regulations cover everything from online subscriptions to games or magazines as well as distance learning, internet-based auction services (like eBay), online content and access to streaming networks.

Source: MyGaming

  • Rick de Klerk

    Interesting. So if I purchase a game through, say, Humble Bundle using my credit card via PayPal, will the credit card company be responsible for the additional VAT?

    • http://www.facebook.com/pages/Wesley-Fick/184346154999538 Wesley Fick

      You might actually be billed VAT for putting money into the Paypal wallet, as it’s an online service that could be classified as an online auction service. But if they overlook it, Paypal would be the ideal way to work around paying VAT and have lower prices.

      • Rick de Klerk

        I’m not really looking to get around it. I just want to know that I’m not going to need to track purchases and add the VAT when I do my income tax.

  • Fireprufe15

    Steam says in their ToS that they absorb the cost of VAT if countries charge it, will this be the case here? https://support.steampowered.com/kb_article.php?ref=8360-wejc-2625#taxes

    Also, how will they charge VAT if I load money directly from my bank account into a virtual credit card, like VCPay or Entropay, via EFT?

    • http://www.facebook.com/pages/Wesley-Fick/184346154999538 Wesley Fick

      Valve says there itself, “To the extent VAT applies to a transaction, Valve absorbs that cost and pays VAT itself.”

      In the case of selling games through Steam to players in the United Kingdom, Valve absorbs the VAT cost into the game’s purchase price and pays VAT to Her Majesty’s Revenue & Customs because if they weren’t registered VAT vendors they wouldn’t be able to offer their service in the UK and other EU countries. We’re EMEA, so we don’t count.

      For SA gamers different rules apply – Valve does not need to be a VAT vendor if they don’t want to be, because SARS will just collect VAT through the banks who will add the transaction on to the final price when the payment goes through on our account (assuming that the government gazette article doesn’t detail a different way of doing this). We’ll still be paying the VAT in the end anyway.

      As for VCPay or Entropay, I wouldn’t be surprised if those are classified as online auction services and have VAT added onto your total when you pay money into them. It’s not likely, but it could happen.

      • Fireprufe15

        I feel that it’s time for me to get an offshore bank account, like all them criminals in the movies :P

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