Do South Africa's e-commerce VAT rules measure up to international trends and OECD guidelines?

Orientation: The taxability of e-commerce transactions have been the subject of many studies to protect governments from Value-Added Tax (VAT) erosion, illegal recovery and fraud. Research purpose: This study critically analyses the challenges posed by e-commerce transactions in South Africa's VAT Act . Recommendations are made for amendments to the VAT Act to improve rules to effectively tax e-commerce transactions occurring in South Africa. Motivation for the study: Globally, including in South Africa, enforcing relevant VAT legislation to target output tax collections and input tax credits from e-commerce transactions aptly remains a challenge. Research approach/design and method: By integrating qualitative literature reviews and comparative synthesis, this study employed a comparative legal methodology. VAT levied on e-commerce transactions in South Africa is compared to the Organisation for Economic Co-operation and Development's guidelines as well as New Zealand's and Australia's Goods and Services Tax legislations. Main Findings: While the South African VAT Act aligns with international best practices on the use of intermediaries, there are some differences as detailed in the study. Practical/managerial implications: To align with international trade counterparts, the South African VAT Act should differentiate between business-to-business and business-to-consumer sales. A provision concerning the place of consumption for bundled goods should be included in the VAT Act . The VAT Act should contain a provision that allows bad debts to be claimed on cash sales made instead of total sales made. Contribution/value-add: This study harmonises South African VAT legislation with international best practices within the context of continual advancement of e-commerce transactions.

Analysis on the Steady Growth Effect of China’s Fiscal Policy from a Dynamic Perspective

Under the goal of a “new development pattern”, it is of great practical significance to accurately identify the economic growth effect of fiscal and tax policies. This paper constructs a TVP-FAVAR model to measure the economic effects of China’s fiscal and tax policies at the aggregate and structural levels. The results show that the reduction in total tax has a positive effect on real variables such as output and consumption;especially at the present stage, the promotion effect of total tax reduction on economic growth is relatively strong, but the stimulation effect on price is relatively weak. Further, the tax structure in which the ratio of direct tax to total tax increases and the ratio of indirect tax to total tax decreases is more conducive to the increase in output and consumption, and will not strongly stimulate the rise of price level. Therefore, at this stage, China should continue to vigorously implement the tax reduction policy and ensure the continuity of the tax reduction policy. At the same time, we should continue to optimize the tax structure and give better play to the regulatory role of fiscal and tax policies in income redistribution, so as to achieve the goal that fiscal and tax policies help build a “new development pattern” and promote high-quality economic development.