INSIGHT: South African businesses operating online marketplaces, subscription platforms or digital-service websites should review their VAT processes where services are supplied to customers in South Africa. The key issue is not simply whether a transaction happens online, but which party is responsible for accounting for VAT and whether the supporting records demonstrate that conclusion.

SARS guidance confirms that the electronic-services rules apply to certain services supplied by foreign suppliers to South African customers. The rules also address situations where an intermediary or platform facilitates the supply. Businesses should therefore avoid treating every platform transaction as an ordinary sale without checking the VAT position and contractual arrangements.

For practical background, SARS’s current FAQs on supplies of electronic services explain how the rules operate for foreign suppliers, intermediaries and online marketplaces.

What businesses should understand

Where a digital service is supplied through an intermediary or online marketplace, the VAT treatment may depend on the status of the intermediary, the residence and VAT status of the underlying supplier, the customer’s location and whether the parties have agreed in writing that the intermediary will treat the supply as its own.

SARS guidance explains that, from 1 April 2025, the intermediary rules were amended to allow a written agreement between the intermediary and the principal to play a central role in determining how the supply is accounted for. The arrangement can also bring joint and several liability for the relevant VAT obligations. This makes the platform agreement an accounting and tax-control document, not merely a commercial contract.

Businesses should also note that SARS’s VAT guidance is intended to assist taxpayers with practical interpretation and application. It does not replace the VAT Act, regulations or a binding ruling. The SARS VAT resource page identifies the relevant guides and explains that these publications are not binding law.

Who may be affected?

  • South African businesses operating online marketplaces or booking platforms;
  • local vendors selling digital products, subscriptions or downloadable content;
  • foreign electronic-services suppliers with South African customers;
  • businesses using an intermediary to collect payment or issue invoices; and
  • finance teams responsible for VAT returns, revenue recognition and transaction reconciliations.

The impact will differ according to the business model. A platform that only advertises a supplier’s services may have a different position from one that controls checkout, collects the customer’s payment, issues the customer invoice and determines the price.

What businesses should check

  • Map the transaction: document who supplies the service, who contracts with the customer and who receives payment.
  • Review the platform agreement: identify any written election or allocation of VAT responsibilities between the intermediary and the underlying supplier.
  • Check customer-location evidence: retain appropriate information supporting the determination that a customer is in South Africa.
  • Reconcile invoices and VAT returns: confirm that gross sales, platform commissions, output tax and settlement reports agree.
  • Separate local and foreign suppliers: do not assume that one VAT treatment applies across every supplier using the platform.
  • Retain the audit trail: SARS requires vendors to maintain tax invoices and proper accounting records, generally for five years, as explained in its VAT vendor obligations guidance.

Practical next steps

Start with a transaction-flow review rather than a software change. Select representative sales from each major product, supplier and payment channel, then trace them from customer checkout to the accounting ledger and VAT201 return. Any unexplained difference should be resolved before the next filing cycle.

Businesses with complex platform arrangements should obtain professional advice before changing their VAT treatment. A documented position, supported by contracts, invoices, customer information and reconciliations, will provide a stronger basis for responding to a SARS query or verification.

YFP can assist businesses with VAT reviews, reconciliations and accounting control improvements. Explore the Your Financial Partner services available to South African businesses.