15% Vat on Fees for South Africans from 1st Jan 2024

[DonCarlos2]

Hi everyone, I just need some clarity as I’m a bit confuse. Please see the below message I got from PayPal recently. Will the 15% Vat only be on the Fees or on the amount received. In accordance with the laws of South Africa, PayPal is obliged to charge and collect VAT at the applicable rate (currently 15%) on all its services that are rendered to merchants and customers in South Africa. In compliance with the VAT laws in South Africa, as of 1 January 2024, you will notice a VAT element in addition to the fees charged by PayPal. We will charge the VAT amount together with our fees for transactions received or processed in your PayPal account. The amount of VAT applied on fees will be indicated on the monthly VAT invoices issued by PayPal, available in your PayPal account. PayPal will not charge you any VAT on fees incurred prior to 1 January 2024. This means that you will not receive any invoices or corrective statements from PayPal, nor will we charge you any VAT, for this period.

[PayPal_Bindu]

Hello @DonCarlos2 

Thank you for writing in the PayPal Help Community!

I am happy to help you with your inquiry about VAT charges for South African PayPal accounts. In accordance with applicable tax laws in South Africa, PayPal is required to charge and collect VAT on its fees at the applicable VAT rate. Any VAT charged and collected by PayPal on its fees is remitted by PayPal to the tax authorities in South Africa in line with applicable laws. You can also view and download VAT invoices monthly once PayPal starts collecting VAT.

Hope this information helps,

Bindu

[DonCarlos2]

Your feedback doesn’t give me any clarity. What you said is already in my question. I want to make sure that the 15% vat is only on the fees and not on the amount received?

[gale1320]

Will I be charged VAT on my salary? 

Every month I am paid my wages via Paypal. I am a private contractor, not a VAT-registered business, therefore I do not charge my foreign employer VAT. I have to pay 18% of my taxable income to SARS already. So will I have to pay VAT on my salary, too?

[DonCarlos2]

Hi Gale

Since were not getting Clarity from Paypal Moderatos on here, i thought id give you an update. I chatted with a Paypal agent the other day, the agent said the Vat is on the Fees only, not on the amount received. So if the fees for the transaction is R1000, the Vat will be R150.

I Hope the agent is correct, but she's the 2nd person to tell me this, another person said the same thing on Reddit.

This is for Businesses and Individuals. Its for every single PayPal account in South Africa.

Vat registered Businesses can claim the funds back from SARS, but must ensure that their VAT number is submitted to Paypal.

Cheers.

[gale1320]

Hello Don

You my friend are amazing! Thank you so much for your help with this; I have been so worried since I got the email! I really appreciate you taking the time to answer my question so thoroughly!

[Louw85]

Any idea about non VAT companies? I can't seem to find anything that gives such companies without a VAT number any options.

[AfricanB]

I earn a small income from a hobby and legally don't even earn enough to have to pay any tax in SA so I'm definitely not VAT registered.  I keep getting emails from PayPal asking me to add a vat number to my PayPal account info.  There is no way that i'm ever going to register for vat as I've been told that it is a nightmare and will no doubt end up costing me what little money I do earn. 

My question is; do I have to get VAT registered now or not. 

[ErikP1]

I am in a similar position. I sell maybe one or two items per month at between $30 and $80 each. I have sent a query to Paypal as follows: "

You have sent me an email asking for my South African VAT number. I do not have one, because I CAN NOT legally have one. Allow me to quote from the South African official website, in this regard ( https://www.gov.za/services/services-organisations/tax/vat/register-vat ) , I quote: "You must register your business for Value Added Tax (VAT) if the total value of taxable goods or services is more than R1 million in a 12-month period, or is expected to exceed this amount.

A business may also register voluntarily if the income earned in the past 12-month period exceeded R50 000. " Since my income is way below the voluntary threshold of R50000, the South African government would be spending more on the processing of this minute amount of tax than would be worth their while.

So: Please advise."

So...if they insist on a VAT number, I won't be closing my PayPal account, even though I am totally p@#$%^ off with PayPal, since I occasionally buy things via PayPal, but I will need to shut down my website and no longer sell my items. That sucks.

[AfricanB]

What did you end up doing?  I haven't sold anything for months but now I have and I can't get my money as the FNB online banking tells me the service is unavailable.  My whole PayPal section on FNB is frozen.  I've been on the phone for hours, mostly listening to a computer or getting distorted lines and worse still just getting cut off.  I'm wondering if the vat issue is behind all of this.  And I notice that the amount paypal deducts from my incoming funds has increase so I guess I'm paying vat on their fees.  I feel like giving up.  Everyone is just grabbing money left right and centre.  Plus what little money is left is sitting in Paypal and I need it here and now.