I see it more and more often that invoices do not comply with the VAT act and therefore VAT can’t be claimed on these invoices. Should a vendor claim the VAT and SARS conducts an audit, the VAT claimed will be reversed and the vendor will be responsible for the amounts incorrectly claimed. Additional penalties may also be imposed.
So, how do invoices comply with the VAT act?
First, it will depend on the amount involved:
< R50
Where the consideration in money for a supply is R50 or less, a tax invoice is not required (however, a document such as a till slip or sales docket will still be required to verify the input tax claimed).
R50 – R3000
Where the consideration for a taxable supply exceeds R50 but does not exceed R3 000, an abridged tax invoice may be issued.
> R3000
A full tax invoice must be issued on transactions where the consideration for the supply exceeds R3 000 whether the recipient has requested this or not.
Then, in order for a tax invoice to be valid in terms of the VAT Act, it must have certain details reflected on the document as set out in section 20(4) and (5) as follows:
Full Tax Invoice (Consideration of R3 000 or more)
Section 20(4) of the VAT Act
The words “TAX INVOICE” in a prominent place
Name, address and VAT registration number of the supplier
Name, address and where the recipient is a vendor, the recipient’s VAT registration number
Serial number and date of issue
Accurate description of goods and/or services (indicating where applicable that the goods are second-hand goods);
Quantity or volume of goods or services supplied
Price & VAT (according to any of the three approved methods discussed below)
Abridged Tax Invoice (Consideration less than R3 000)
Section 20(5) of the VAT Act
The words “TAX INVOICE” in a prominent place
Name, address and VAT registration number of the supplier
Serial number and date of issue
Accurate description of goods and/or services
Price & VAT (according to any of the three approved methods discussed below)
The consideration and the VAT charged must be reflected on the tax invoice in one of the following approved formats:
Method 1 : All individual amounts reflected:
Price (excl. VAT) R500
VAT @ 14% R70
Total including VAT R570
Method 2 : Total consideration and the rate of VAT charged:
The total consideration R570
VAT included @ 14%
Method 3 : Total consideration and the VAT charged:
The total consideration R570
VAT included R70
Here is a PDF file made available by SARS showing examples of valid tax invoices.
