Google Ads Now Subject To VAT In South Africa

Google has without a doubt a monopoly stronghold when it comes to search and digital advertising and South Africa is no exception with millions of rands being pumped into its Google Ads platform each and every month. Many South African businesses have been reliant on their services to grow their business and the slightest effect in pricing can quickly start to eat into margins.

Google Ads in South Africa has been pretty lax when it comes to tax and it was recommended that advertisers handle the tax on their own, until now. The South African government introduced new VAT rules from 1 April 2019 and according to with these new rules customers with a billing address in South Africa are subject to a 15% VAT.

Google will now be responsible for charging and remitting VAT for all transactions for South African customers at the current tax rate of 15%. This rate can change at the South African government’s discretion. While no action is required on your side in regards to your Google Ads account.

Value Added Tax on Google Ads in South Africa

Starting April, 15% VAT will be withheld from any prepayment made by customers to Google Ads accounts to ensure customers do not overspend

For example, if a customer manually paid 100 ZAR effectively there will be only 85 ZAR available for the customer to spend.

VAT is charged only once at the end of the month for the total amount of services provided, which means that our system will automatically refund any excess amount of VAT that was withheld from prepayment  Google Ads customers will receive two documents - a statement and a monthly VAT invoice that will include Tax ID and information about the VAT amount.

Should you have any questions, please do not hesitate to contact your account manager.

Value Added Tax (VAT) and Google Ads status

How it worked in the past was South African Google accounts are served by Google Ireland Ltd., but Google previously could not charge VAT if your billing address is in a country that's not part of the European Union.

The way around this was to check with your local tax authority to see if you're required to self-assess VAT in your country. Since this was the obligation of the advertiser South African businesses did not really bother to consider this and continued to use the service tax-free. Google only offered the recommendation for businesses to consult a tax advisor or local tax authority and provide self-assessed VAT.

Self-assess VAT

If you weren't charged VAT on your Google Ads costs, you would be required to self-assess VAT by contacting the local tax office for advice and then setting up those payments. 

If you want more detail on the consolidated regulations on electronic services by the South African government, you can view the updated regulations here

Tell us your paid search marketing story

Have you been using paid search marketing in the past? How has it worked for you? How do you think VAT will affect your account performance? Are there any tips you would like to share on paid search marketing? Let us know in the comments.

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Recommended reading

If you enjoyed this post and have a little extra time to dive deeper down the rabbit hole, why not check out the following posts on paid search marketing. 

• 10 Reasons Why Your Business Needs AdWords
• Google Launches Optimize and AdWords integration
• How to Improve your SEO with PPC
• Google launches an Adwords Ad Bot Pilot Program

Tags: tax , south africa, PPC, Paid Search