In a move to increase the tax base to fill in its budget deficit, the government of South Africa has proposed that foreign companies selling electronic books, music and other digital goods and services registered as VAT vendors and pay additional tax to the government.
Finance minister Pravin Gordhan yesterday in his budget speech said,” Due to weak economic growth during the second half of 2012, mining sector disruptions and lower commodity prices. Tax revenues are expected to improve over the medium-term in line with higher economic growth and the stabilization of key commodity prices.”
Gordham added, ” We find ourselves in a challenging period, with revenues lower than expected by R16.3 billion compared with estimates at the time of the 2012 budget.”
To fill the budget deficit of around 5.2% of the country’s GDP for the financial year ending March there were proposals made.