A tax invoice plays a pivotal role in the VAT system for suppliers and recipients alike. In terms of the Value-Added Tax Act, No 89 of 1991 (VAT Act), a supplying vendor is obliged to issue a tax invoice that complies with the requirements of the VAT Act within 21 days of making a taxable supply to a recipient. Similarly, a recipient vendor will only be entitled to claim an input tax deduction in respect of a VAT cost incurred for the purpose of making taxable supplies, to the extent that he or she is in possession of a valid tax invoice at the time of claiming the deduction.
A tax invoice is therefore an essential part of the audit trail of a vendor and its enterprise activities, and the failure to issue a tax invoice is a contravention of the VAT Act and an offence in terms of the Tax Administration Act, No 28 of 2011.
The VAT Act sets out the requirements for a valid tax invoice and provides that the document must contain the words ‘tax invoice’, ‘invoice’ or VAT invoice’; the name, address and VAT registration number of the supplier and the recipient; an individual serialised number and the date upon which the tax invoice was issued; a full and proper description of the goods or services supplied as well as the quantity thereof; and the value of the supply and the amount of VAT charged thereon.
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28 January 2019
This article first appeared on cliffedekkerhofmeyr.com.