Ok, but this is becoming a non issue with the changes mooted during the budget speech.Originally Posted by Ike_009
Ok, but this is becoming a non issue with the changes mooted during the budget speech.
Ja you know I'm a bit rusty with those tax laws, seeing as I've never really earned a salary. I am aware of the law and section 14 though. Something I saw the other day on steam while making a purchase was that there is actually a tax tab on the final purchase page, so why, if the law dictates we pay taxes on these products, can't the government come in an agreement with steam to add South African tax on South African buyers? We don't complain when we pay it at BT.
Additionally I haven't actually read that part of the law myself, but why do I need to pay tax (or VAT) on digital goods. Technically I'm purchasing a license for that product (because I can download that game/music/book/movie from anywhere with my account) which means that if other countries have similar laws, then I will have to pay tax(or VAT) every time I download the thing I only bought a liscence for, because I'm importing the data once again, or am I wrong? Also if I then moved to another country then I would have to pay that state tax when downloading the data from there if they have a similar system.
Sorry if I'm asking answered questions, but I'm just thinking out loud.
VAT is an end user tax on consumption so when you buy that license to install a game its the same as you walking into BT games and buying the game off the shelf. The reason why you would not be taxed on multiple installs is that most acts include double tax prevention sections, plus wouldn't your primary usage at transaction date be use in SA. Its the same when a tourist buys goods here and then takes them back home, they can claim the VAT back since it won't be used here.
The tax here isn't on the data but the license and intellectual property usage right contained in that licence.
There are some people who argue that if you emigrate to another country you should be refunded the VAT in SA and pay the applicable consumption tax in the new country but that's getting really technical and defeating the purpose of VAT. It just wouldn't be fair to tax you twice and then an even bigger issue to prove refunds.
The big issue here though is that one of the reason SARS charges VAT on the importation on goods and services is to level the playing field for business in SA. If you as the consumer had the option to pay R114 (R100 plus VAT of R14) in SA or to import and pay R100, which would you choose? Do you see how this could close down the local business for doing nothing but following tax legislature.
That's one of the issue with the digital distribution model is that since your not physically passing something through customs it's easy to pretend you didn't import something. Now sars could ask steam to collect VAT like it does for BT games but steam isn't an SA retailer and that makes it hard for sars to exercise it's rights, that's why it has section 14.
A lot of your question are very valid I'm sure SARS and other tax agencies are trying to figure that one out. However I did spend plenty of time talking to one of my lecturers and they also agree these steam purchases should carry VAT, it meets the right definitions and requirements. The problem is we need to get buyers to own up to what they bought and pass on the VAT due to sars. That's also why I like BT games option, you pay the VAT like you should and allow SA to make some money but it seems I'm in small group here vs those who prefer the cheaper price less VAT.
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Won't something like this hurt their retail copy sales?
This is competing with steam and gmg so I can't see how it would take away from existing sales
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Epic answer thanks a lot man. So one final thing, if we are purchasing from steam, are we paying the tax or VAT on the product from the country in which Steam is located so that it cohears with their laws? Because when I go check the steam prices with those of say BT Games, then regularly I would see that the prices are only a few rands off when comparing them with the latest exchange rates. So how does BT Games actually make money when sometimes the product might even be more expensive on steam than in BT?
America doesn't use the same system as us, normally they add "sales duty" on sale and the prices displayed don't include "sales duty" until you reach the till where they add it there. This also changes depending on which state your registered in etc as each american state has it's own laws and collection procedures. However I'm onlu going off a limited theoretical knowledge base here so I might be off. Maybe steam classes the sale as an export in which case it just ignores "sales tax" altogether as export are normally zero-rated and then leaves the tax implications to the end user if outside the USA.
As for the price remember that you buy games at consumer prices while BT games buy at dealer price which are much lower so BT games and steam should have the same cost price (ignoring for-ex fluctuations). Theoretically Origin and U-play should be the cheapest as the publisher is selling directly to the public without a middleman who also includes their own mark up on top off the publishers mark-up.
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But if it's that much easier to buy it through an online store as a digital download, then the retail copies of the game may not sell as good (depending on how many people buy digital, rather than the physical copy). Unless I've misinterpreted what you're trying to convey.
Yes I think you understood what Ike was saying. Many folk still do not have uncapped Internet connections and with the size of downloads the only affordable way to do this is via an uncapped account.
He is saying people that will buy digital games from them are already buying from Steam and other similar services, so they are already not buying from their stores.
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