Digital Taxation: It’s happening

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By now, you’ve all probably heard very much about the news that the government plans to implement taxation on digital purchases made from within South Africa. Yes, your government wants even more of your money. It is unfortunately true, and as of April 1, if government gets its way both physical and digital goods you buy online will be subject to the 14% VAT we already pay on everything.

This includes thing you buy from Google’s play store, Apple’s iTunes, XBox Live’s marketplace, PSN and yes, even Steam – so you best start getting ready to cough up even more for your games and digital services. What? Digital services too? Yup, things like Netflix, Paypal, Unotelly, or whatever other services you pay for will cost you even more. Want to buy an eBook, or book an online course? Yup, that’ll cost you more too.

Here’s a list of everything you’ll be required to pay VAT on:

Educational services
  • distance teaching programmes;
  • educational webcasts;
  • internet-based courses;
  • internet-based education programmes; or
  • webinars,
Games and games of chance
  • internet-based games, including any electronic game or multiplayer role-playing game;
  • interactive games, such as games of chance, where the result is influenced by the skill of the player;
  • electronic betting or wagering.
Information system services
Internet-based auction service
Maintenance services

Which refers to technical support relating to

  • blogs;
  • databases;
  • information systems;
  • information system services; and
  • websites.
Online content
  • e-books, which means any digitised content of any book or electronic publication;
  • films, which means any broadcast, documentary home-made video, live streaming performance, movie, music video, program, television series, or video
  • images, which means any desktop theme, photographic image, pictorial image, or screensaver,
  • music, which means any audio clip, broadcast jingle, live streaming performance, ringtone, song, or sound effect,
  • software, including apps, system software, or plugins, and any update to these programs.
Subscription services

Any subscription service to:

  • blogs;
  • databases;
  • information system services;
  • journals;
  • magazines;
  • newspapers;
  • games;
  • social networking services;
  • webcasts;
  • websites;
  • web applications; or
  • web series.

The only way to implement this realistically, is to have it done automatically by banks when you make purchases, or require that services such as Steam comply with Vat regulation, which means they’d need to be registered VAT vendors. Do you really think all of the international companies you buy from are going to register for that? Not a chance in hell; instead, I suspect it just means we’ll be geofenced off from everything. In the end, it’ll mean you may as well say goodbye to the open market on the internet – and hello to a lot more digital piracy.

Piracy is driven more by ease of access than cost, and if everything’s blocked, it makes sense that media consumers will look elsewhere for that content.

Last Updated: January 31, 2014

Geoffrey Tim

Editor. I'm old, grumpy and more than just a little cynical. One day, I found myself in possession of a NES, and a copy of Super Mario Bros 3. It was that game that made me realise that games were more than just toys to idly while away time - they were capable of being masterpieces. I'm here now, looking for more of those masterpieces.

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