What a valid tax invoice needs in South Africa

If you are registered for VAT, the invoices you issue have to meet the VAT Act. If your customer is registered, the invoices they receive from you are what they claim input tax on, and an invoice that does not meet the Act can cost them the claim. That makes the layout of an invoice a matter of money for your customers, and so a matter of reputation for you.

A quote is not a tax invoice

A quotation, a statement, a pro forma invoice and a delivery note are not tax invoices. A tax invoice is a document that records a supply that has happened. An invoice from a supplier who is not registered for VAT is not a tax invoice either, however professional it looks, and cannot be used to claim input tax.

What a full tax invoice shows

A full tax invoice is the standard one. Where the value of the supply is more than R5 000, the invoice has to carry all of the following.

The abridged tax invoice

Where the total is R5 000 or less, an abridged tax invoice is allowed. It still has to show your name, address and VAT number, the date, a description of the goods or services, the total amount, and either the VAT charged or a statement that the amount includes VAT. It does not need the customer's details. Till slips are the common example.

Credit and debit notes

If an invoice is wrong, you do not change it. You issue a credit note to reduce it or a debit note to increase it, and the note refers to the original invoice. Software that lets you edit an issued invoice in place breaks the paper trail that SARS looks for. Ask any product you are testing what it does when you need to correct a sent invoice.

What your software should do

• Print the words tax invoice and your VAT number on every invoice, automatically.
• Number invoices in an unbroken sequence and warn you before a number is skipped or reused.
• Hold your customers' VAT numbers and address them on the invoice when the value needs it.
• Show the VAT amount per line and in total, in rand.
• Issue credit and debit notes that point back to the invoice they correct.
• Keep a copy of every invoice you issued, in a form you can produce to SARS.

Sending invoices electronically

A tax invoice may be issued and kept electronically. An emailed PDF is a valid copy as long as it carries every required detail, and the record you keep can be produced to SARS in a readable form. What matters is that the invoice you send is the same as the one you keep, which is another reason not to edit sent invoices.

A check before you send

• Is the word invoice or tax invoice at the top?
• Are your VAT number and address correct?
• Is the customer's name right, and their VAT number there if the value is above R5 000?
• Does the invoice have a number that follows the last one?
• Do the lines add up, and does the VAT total match the VAT on the lines?

Keep the copies

You are expected to keep your financial records, including the invoices you issued and received, for five years. If your software is cloud based, check that you can still reach them if you cancel, and that you can download them in bulk. See choosing accounting software in South Africa for the exit questions.