The aim of the study was to determine the main reason for using the services of offshore suppliers and to determine whether there are internal and external controls in place to deal with the imported and electronic services at the University of KwaZulu-Natal . 60 4.20 Bar chart indicates whether VAT implications are taken into account 61 4.21 Bar chart indicates whether VAT implications apply 62.
Introduction
Problem Statement
The objective of this study is to determine whether universities can successfully implement imported and electronic services from a legal perspective.
Motivation for the Study
Focus of the Study
Objectives
Research Questions
Proposed Methodology
The research instrument to be used will consist of surveys and the data collection methods will consist of postal and Internet surveys. The research methodology will be discussed in more detail in chapter three of the study.
Chapter outline
The limitations encountered in this study will be considered and ways to address them and address them for future purposes will be suggested to overcome these limitations.
Summary
Introduction
The Economics of an increase in VAT
The table above shows that VAT is the second largest source of revenue for the tax authorities in South Africa. The inclusion of VAT on imported and electronic services will increase VAT revenue for South Africa.
The Ability to pay taxes
VAT is a self-assessment and the onus rests on the consumer to remit the VAT to SARS (SARS, 2015). When a person is registered for VAT, output VAT is declared on income and input tax is claimed on expenditure relating to the taxable supplies.
Provisions of the VAT Act that pertain to imported services
Exemptions
The supply would be exempt from VAT or zero-rated under the VAT Act if supplied in SA; or. VAT is imposed on any person's supply of imported services on or after the effective date, cf. VAT Act section 7, subsection 1, letter c).
Market Value of a transaction
Electronic Services
Decisions arising from Case Law
Exceptions to the Rules
E-Commerce
VAT Neutrality
Protecting Domestic Industries
To protect jobs in local markets, many people may lose their jobs if cheaper goods are bought from foreign suppliers, for example the US protects its steel industry from countries like Brazil. To protect the domestic industry, if left unprotected for too long, the industry will eventually collapse, resulting in the country needing the product from the foreign supplier.
Reasons for using offshore suppliers
However, some studies show the opposite, that using offshoring services has an insignificant and negative effect on production (Ito & Tanaka, 2010). But there were several studies that showed that using overseas suppliers has a positive effect on production (Seok & Saghaian, 2016).
The Destination Principle
Empirical results show that using foreign suppliers, holding all other factors constant, increases productivity and is effective (Seok & Saghaian, 2016). The Republic of South Africa has double taxation agreements (DTA) with several countries, but the agreements are more focused on avoiding double taxation on income tax than on VAT (Janse van Rensburg, 2012).
Cross Border trade
In this case study, the participants examined the application of the destination principle and the final consumer, who is not a business, is the recipient of the cross-border supply of goods and services. One of the main questions that would trigger VAT/GST is the ownership of the business enterprise that is in country B.
Consumption of Imported and Electronic Services
Dendy (2012) argues that the physical place where services are provided determines the place of supply and not the place of consumption. Hull and Gibson (2012) argue that the place of consumption is “where the benefit is felt or where the service is experienced”. They also state that where the benefit is experienced in multiple other countries including South Africa, the place of consumption will be South Africa to the extent that the services are consumed in South Africa (De Beers, 2012).
Guidelines on place of taxation
In terms of the business arrangement, Company T is the supplier and Company S is the recipient. Supply in terms of business agreement Company S is the recipient and Company T is the supplier. For the purposes of this Guide, Country A is the location of the company where the customer is located.
On The spot Supplies
For the application of guideline 3.2, the identity of the customer is usually determined by reference to the business arrangement (OECD, 2015). De Wet (2015) states that in practice it is difficult to prove that the recipient is a resident of the Republic, he must meet the definition of "resident" in Article 1 of the Income Tax Act and additional VAT tests. Supplier competence could also be used as a proxy for implementation competence, eliminating potential risk or uncertainty issues.
Information needed to perform at the workplace
De Wet (2015) agrees that the location where the physical supply takes place is a suitable indicator in determining tax jurisdiction, but this can be problematic for countries that have not followed this approach. For countries like South Africa where no distinction is made between B2B and B2C supplies, the requirements in guideline 3.5 can be used and this is a compliance relief for suppliers in the country, they do not have to distinguish between businesses or final consumers (OECD, 2015) . It is rare to find searchers who adhere to the advice they receive, change it or combine it with other advice or do not use it at all (Gino, 2015).
Erosion of the tax base
Ninety countries are working on a Multinational Tax Treaty instrument to include base erosion and profits procedures. The BEPS project, the emergence of new minimum international standards and unilateral measures that replace the current framework, may lead to renewed international pandemonium and double taxation (Hofmeyer, 2016). In the South African context, the government needs to ensure that the national development plan is aligned with the BEPS project plans, which could ensure that MNCs and corporate taxpayers in South Africa invest heavily in local anti-avoidance measures.
Apportionment
Enforcement
Compliance
Audit
Taxpayers are encouraged to transact with taxpayers who have complied with and registered with the tax law in order to qualify and receive any credit, one way to achieve this using the invoicing system is through a self-executing collection mechanism VAT. From this it can be concluded that self-enforcing tax mechanisms result in lower enforcement costs by tax authorities and vice versa. In this case, the costs of enforcement by the tax authority are comparable to the costs of fulfilling the taxpayers' obligations (De Mello, 2009).
Tax Invoices
Empirical studies in this field are complex due to the fact that tax evasion and avoidance has not been uncovered.
Conclusion
Introduction
Aim of the Study
Participants and Location of the Study
Research Approach
Mixed approach is a mixture of qualitative and quantitative data collection techniques used in research study (Saunders, Lewis and Thornhill, 2012). The quantitative technique allows the researcher to draw out the characteristics and views of the selected population (Abareshi and Martin, 2008). The quantitative approach also allows the analysis of data collection effectively and efficiently (Abareshi and Martin, 2008).
Sampling
According to Creswell (2014), purposive sampling is based on a special characteristic of the study, which must be common to the participants. It was noted that in some departments, Personal Assistants (PA) dealt with the payment of foreign payments and VAT on imported and electronic services. Selecting information-rich participants who have information-rich knowledge and informants is a major advantage of using purposive sampling (Leedy and Ormrod, 2013).
Data Collection
Several phone calls were required to get some respondents to complete the questionnaires. The target population for the questionnaires were participants from the finance departments of all UKZN schools, faculties, departments and central finance who work with VAT on overseas payments. A UKZN informed consent letter was attached to the questionnaires, providing details of the researcher, supervisor and research office to contact if participants had any concerns.
Development of the Instrument
A survey link was sent directly to participants other than the Westville and Howard campuses whose e-mail addresses were available, follow-up messages and reminders were sent to those respondents who did not complete the surveys. The Likert rating scale was used for most questions where the participant has a five point rating scale to determine how much the respondent agrees or disagrees with the statements. The balance of the survey consists of category type questions, only one answer fits the question asked (Saunders, Lewis, & Thornhill, 2012).
Pretesting and Validation
A generalization made from questions in a questionnaire that measure the theoretical constructs to be measured. Cronbach's alpha was used to ensure the reliability of the questionnaires and is a common coefficient used in a quantitative approach (Saunders, Lewis, & Thornhill, 2012). An alpha coefficient value between 0.6 and 1 reflects a good level of internal consistency and measures the reliability of the collected data (Sekaran and Bougie, 2013).
Analysis of the Data
Summary
Introduction
Analysis of Questionnaire
Presentation of Result
Descriptive Statistics
Figure 4.1 shows that women make up the majority of the sample (58%) who completed the questionnaires. Figure 4.2 shows that the majority of respondents are others (60%), followed by accountants (26%) and managers (14%). Figure 4.4 shows that the majority of respondents (80%) were for an indefinite period, followed by (18%) for a definite period and (2%) for a definite period.
Summary
Based on the chart above, most of the participants are satisfied that foreign suppliers have complained about VAT legislation in relation to sales in South Africa.
Introduction
Has the data answered the research question?
From the analysis of the findings, most of the respondents strongly agreed that more guidelines are needed. From the analysis of the findings, most of the respondents agree that there are internal and external controls in UKZN.
Benefits of this Research
UKZN can be satisfied that it has no choice but to use offshore service providers if areas of expertise are not in South Africa. UKZN management can be confident that their staff working with imported and electronic services are confident that they are doing their jobs correctly. Domestic suppliers can be satisfied with compliance with the law and are not at a disadvantage.
Recommendations to solve the business problem
Foreign suppliers can be reasonably assured that UKZN is a complaint to the tax authorities and will be corrected if they are not compliant. Foreign taxpayers must be informed of the VAT requirements of South African law in order to carry out a transaction, otherwise UKZN should not carry out the transaction or charge VAT on an electronic transaction that was not charged by the foreign supplier. The cost of this recommendation is not a factor because under the VAT Act, the foreign supplier must declare VAT and if VAT is not charged, the responsibility lies with the recipient (UKZN).
Limitations of this study
It was difficult to identify some potential participants due to the delegation of tasks and therefore it was difficult to identify some potential respondents. Some potential participants felt that completing the questionnaire and putting their names on the consent forms could lead to a critical assessment of their knowledge or work. The quantitative approach was a good way to obtain the primary data, but the disadvantage was that there was no more descriptive element to the data collected.
Recommendations to overcome the limitations
To achieve a high sample, the response rate had to be very good and it is sometimes difficult to persuade potential respondents to complete the questionnaire. Respondents promised to complete the questionnaire on time but did not adhere to the timelines given. It must be made very clear to the potential respondents that their participation in the questionnaire is voluntary.
Summary
International Tax Review, The Challenges of Vat in South Africa.[Online] Available from: http://www.thesait.org. Value Added Tax on Electronic Services Provided by Persons Outside South Africa.[Online]Available from:http://www.t he. Online]Available from: http://www.oecd.org/ctp/oecd- presents-outputs-of-oecd-g20-beps-project-for-discussion. [Accessed: 31 January 2016].
