There seems to be a lot of confusion as to whether or not online vendors should include VAT as part of their advertised price. After doing a little digging in the SARS archive, I came across the very black and white that stipulates you must include VAT in your advertised price if you are selling products in the Republic of South Africa, unless you indicate next to the product: “price not VAT inclusive”.
Even if all your prices include VAT, it’s a good idea to advertise somewhere on your site that “All prices are inclusive of Value Added Tax (VAT)” just so there are no surprises. It might even be worth indicating on another page in a longer explanation what the terms of VAT are, just so that your foreign customers can breath easy. VAT is of course not payable on orders if both the billing and the shipping addresses are international – i.e. an Englishman paying in pounds should not pay the VAT on his purchase at your online South African eCommerce store.
Not including VAT can pretty much guarantee you that somewhere down the line, someone is going to come across your site, find a “bargain deal” and then throw up a storm because their invoice adds on another 14% to the advertised price. In all respects, this is a kind of false advertising and in many countries overseas, the merchant is liable to sell to the buyer at the advertised price – no matter what it is.
One of the keys to making sure the your online store serves your online customers in a way they're used to and expect while adhering to the law is to incorporate eCommerce software that will streamline processes such as discounting VAT on all orders shipped to addresses outside the Republic of South Africa while providing the option for a customer to enter in his VAT number on an order of over R5000 (required if she wishes to later claim the VAT back). Even with the right software on board it’s still advisable that you read through the 2006 updated VAT guide for Vendors.
Knowing the facts and using a tried and proven eCommerce package can ensure both a happy customer and a happy taxman.
Posted
Sep 24 2008, 02:08 PM
by
Byron Levey