Technological Advances in The Music Industry May Cause Some Consumer Tax Problems in South Africa

Stephanus Van Zyl

Abstract

The music industry has seen a memorable technological advancement from thevinyl to magnetic tape to CD and now it has become completely digital in the format of MP3 and MP4 files that can be played by many devices. These digital files are virtually intangible as transfer from one device to another can be done by merely connecting to the internet or using infrared or Bluetooth technology which are all wireless connections. 

VAT as a consumer tax in South Africa is levied in terms section 7(1)(a) of the Value Added Tax Act 89 of 1991, “subject to exemptions and exceptions”, on all supplies of goods and services rendered by a VAT vendor in the furtherance of his enterprise. Section 7(1)(b) states that VAT will be levied on any person who imports goods to South Africa. Section 7(1)(c) imposes VAT on any person who imports services to South Africa.

This article will discuss how new digital music technology has influenced The South African Revenue Services’ (hereinafter referred to as SARS) ability to levy VAT on the sale of digital music and the importation thereof. The article will also discuss possible solutions and its feasibility.

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