The VAT Act requires any person who imports a service to pay VAT on the higher of the amount paid or the open market value of the service imported.
The VAT on imported services is to be calculated and paid over to SARS where the services imported are to be used in the making of exempt supplies. The imported services envisaged here would include items such as technical fees paid to non-residents as well as electronic services provided to a resident by a non-resident supplier that is not liable to register for VAT in South Africa.
The importer is required to account and pay the VAT amount within 30 days of the earlier of when the service provider issues an invoice or any payment is made. If the invoice is in a foreign currency, the relevant invoice must be converted to rand using the exchange rate prevailing at invoice date. Thereafter VAT at 15% is to be calculated on the rand amount.
In instances where a registered vendor imports services for use in the making of exempt supplies VAT on imported services must be declared on the VAT 201 form. Likewise, persons that are not registered VAT vendors will also have to account for and pay VAT on imported services.
In terms of the recently issued guidance issued by SARS, importers of services that are currently not registered for VAT are required to obtain, complete and keep in their possession a VAT 215 form for a period of five years. Such a form can be obtained on the SARS website. The payment of VAT should be made on the SARS efiling system with the Income Tax Number of the importer of the service being used as a reference.
If you require assistance with the above, please don’t hesitate to contact one of our PKF Octagon Partners or tax specialists.