What is VAT?
VAT is the abbreviation of Value Added Tax. VAT is in general due when goods and/or services are sold. It applies to most goods and services that are bought and sold for use or consumption in South Africa. It is a consumption tax because it is ultimately borne by the final consumer.
Who must pay VAT?
Generally, VAT is invoiced by the supplier that is selling goods or services and collected from the customer. Subsequently, the supplier reports and remits the collected VAT to the tax authorities.
Note: In case of cross border transactions involving electronically supplied services (ESS), under the current legislation there is no differentiation between supplies made to business customers (B2B) and supplies made to consumers/private individuals (B2C). As such, where a supplier of ESS is liable to register for VAT in South Africa, as is the case for Zoom, it must account and remit VAT on all supplies to South African customers.
In the case of cross border transactions involving the supply of services not considered as ESS (e.g., Zoom Phone), the recipient is required to account for output tax on imported services to the extent the service is acquired for non-taxable purposes. This is similar to self-accounting for local VAT under a so-called "reverse charge rule".
Why am I being charged VAT?
Video conferencing services and telecommunication (in the form of electronic communication services) supplied by Zoom fall within the rules concerning Electronically Supplied Services (ESS) in South Africa. As such, Zoom is required to collect South African VAT on all supplies of ESS made to customers in South Africa.
What is a VAT registration number?
A VAT number is a unique 10-digit number, the first digit of which is always the number 4, assigned by SARS that identifies a person/entity as being a registered VAT vendor in South Africa. The VAT registration numbers of both the supplier and recipient (if the recipient is registered for VAT), are required to appear on all invoices exceeding R5,000 (circa USD 290).
As such, if you are a busines customer, please make sure that your VAT number is entered in the Zoom billing portal so that your VAT number can be shown on invoices issued to you by Zoom (see “How do I enter my VAT number”).
How do I enter my VAT number?
To enter your South African VAT number, please follow these steps:
- Sign in to the Zoom web portal.
- In the navigation menu, click Account Management then Billing.
- Under Billing Contact, choose to edit the VAT Number (which appears after the Billing Contact Address field).
- Enter your South African VAT number and save.
Does Zoom have a VAT number?
Yes. Zoom is registered for VAT in South Africa. Zoom’s South African VAT number will be shown on the invoice it issues to you.
How is Zoom determining which customers South African VAT applies to?
Zoom will apply VAT based on the place of supply rules for a non-resident supplier making supplies of ESS to customers in South Africa. Where two of the three conditions below are met, Zoom will charge and collect VAT on all supplies to customers in South Africa (both B2B and B2C):
- the recipient of the services is resident in South Africa;
- the payment originates from a South African bank; and/or
- the recipient of the services has a business, residential or postal address in South Africa.
Will VAT apply if a South African company purchases Zoom for use in a location outside of South Africa?
If the place of supply rules noted above are met, then Zoom will charge South African VAT on supplies to a South African company even if the application is used in a location outside of South Africa.
Is there a minimum threshold purchase amount before VAT is applied?
No. All supplies of ESS to customers in South Africa (both business and individuals) are subject to South African VAT.
Are there any special exemptions applicable for charities under which VAT may not be charged?
No. There are no exemptions from VAT available under South African VAT rules for the ESS Zoom supplies to charities in South Africa
Will VAT apply even if a South African company provides a valid VAT number to Zoom?
Yes. Zoom will charge VAT on all supplies of ESS to B2B and B2C customers in South Africa.
Are there any VAT obligations for me as a customer?
No. If you are a registered for VAT in South Africa and you want to claim an input tax credit for the VAT paid to Zoom, as a minimum, you should ensure to keep a copy of Zoom’s invoice for your records.
What if I have a VAT number and forget to enter it?
Your VAT number may be updated at any time into Zoom’s billing portal. Once the VAT number is entered it will show on your next invoice.
Every customer is unique and so are their specific tax circumstances. The above stated information should not be considered as tax advice, but as a general overview of relevant tax rules. Zoom cannot provide you with tax advice for your individual situation, and therefore we strongly recommend speaking with a professional tax advisor for tailored advice.