What is VAT?
VAT is the abbreviation of Value Added Tax and is in general due when goods and/or services are sold. It generally applies to all goods and services that are bought and sold for use or consumption in South Africa. It is a Consumption Tax because it is borne ultimately 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 Freshworks, it must collect and remit VAT on all taxable supplies to South African customers.
Why am I being charged VAT?
Freshworks provides Software-as-a-Service that falls within the rules concerning Electronically Supplied Services in South Africa. As such, Freshworks is required to collect South African VAT on all supplies made to customers in South Africa.
How is Freshworks determining which customers South African VAT applies to?
Freshworks will apply VAT based on the VAT rules for a non-resident suppliers providing services to customers in South Africa, which are subject to the electronic services rules.
It is your responsibility as a customer to ensure that your bill-to/ship-to address is correct.
Does Freshworks provide VAT exempt or non-VATable services?
No. All services currently provided by Freshworks to customers in South Africa are subject to South African VAT at the standard rate.
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 services Freshworks supplies to charities in South Africa.
Will VAT apply even if a South African company provides a valid VAT number to Freshworks?
Yes. VAT applies to all the products/ services that Freshworks makes to customers in South Africa.
Are there any VAT obligations for me as a customer?
No. The customer in principle has no VAT obligations. If you are a registered for VAT in South Africa and you want to claim an input tax credit for the VAT paid to Freshworks, as a minimum, you should ensure to keep a copy of Freshwork’s invoice for your records.
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. Freshworks cannot provide you with tax advice for your individual situation, and therefore we strongly recommend speaking with a professional tax advisor for tailored advice.
Sorry, our deep-dive didn’t help. Please try a different search term.