Here’s what’s acceptable when it comes to tax invoices

43984, 20 Nov. 2014

Tags: sars, tax invoices, invoices, tax audit, vat audit

SARS is very strict when it comes to tax invoices.

For example, you must ensure certain details appear on your tax invoice and you must adhere to certain requirements when making copies.

Basically, either you do things SARS’ way or prepare to have SARS deny your input tax claim, face hefty penalties and endless audits.

Since that’s a risk you can’t afford to take, keep reading to find out what’s acceptable when it comes to tax invoices.

Tax invoices 101: The following will stand up to SARS’ scrutiny

#1: Your tax invoices must be in the correct format

The tax invoices you issue and receive must have the following details for SARS to consider them valid:

•    The words “Tax Invoice” (and not “Vat Invoice”);

•    The name, address and Vat number of the supplier;

•    The name, address and Vat number of the buyer;

•    A serial number of the invoice;

•    The date;

•    A description and the mass or quantity of the goods bought;

•    The amount paid for the goods bought; and

•    The amount for the supply, the Vat and the total, or a statement that Vat is included in the price and the rate at which it was charged (i.e. either 0% if zero-rated, or 14% if standard-rated).

#2: Copies are acceptable as long as you obey these rules

If, for example, you lose or misplace your original tax invoice, you can ask your supplier to give you a copy of the original. Here, the rule is he has to mark it clearly as a “copy”.

If you photocopy an original tax invoice, you must mark it as “copy” after photocopying.

In addition, if your supplier faxes a tax invoice to you, you must print it on plain paper so you won’t lose the information on it.

What about email?

Your supplier can email you a copy of the invoice, with the word “copy” printed on it.

#3: Sending tax invoices by email is acceptable

If you decide to take advantage of the convenience and cost-effectiveness of email and send tax invoices to your clients electronically, make sure you comply with the following requirements:

•    Your clients must agree in writing that they’re willing to accept electronic documents. Make sure you keep this agreement for five years.

•    Your tax invoice must contain all the information detailed in point one.

•    You must transmit the tax invoice in encrypted form of at least 128 bit encryption. This way, the document is secure and you’ll avoid fraud because it won’t be possible for crooks to interfere or tamper with it in any way.

•    The electronic document will serve as the original tax invoice and you and your supplier must keep it safe for five years.

Remember, a tax invoice is the most important link in the Vat chain. If you get it wrong, you won’t be able to claim input tax. What’s more, SARS will hit you with penalties or audit your business.

Don’t take chances. Make sure your tax invoices stand up to SARS’ scrutiny now that you know what’s acceptable.

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