What’s the difference between a regular invoice and a tax invoice?

43984, 29 Aug. 2014

Tags: regular invoice, tax invoice

Are you one of those vendors who think there’s absolutely no difference between a regular invoice and a tax invoice?
If so, you must change your thinking because these are two separate documents.
Read on to find out how they differ so you can ensure you issue and receive correct, watertight tax invoices every time.
Explained: The difference between a regular invoice and a tax invoice
Invoice: An invoice is any document that notifies a person of his or her obligation to make a payment.
Tax invoice: A tax invoice, on the other hand, is a special document that the Vat Act requires. It’s the most important link in the Vat chain and it’s the one you should concern yourself with.
You need it to claim any input tax credits in your Vat return for taxable supplies you receive, like products you buy to enable you to deliver a service or sell a product in your business, for example, building materials (if you do construction), office supplies, telephone usage, etc.
What makes a tax invoice different from an ordinary one is that it must contain things like:
  • The words “Tax Invoice”;
  • The name, address and Vat number of the supplier;
  • A serial number;
  • The date the product/service was issued;
  • A description and the mass or quantity of the goods bought; and
  • The amount paid for the goods bought.
In terms of Vat law, you must issue a valid tax invoice to the recipient within 21 days of the sale. If you issue a defective tax invoice, or fail to issue one within 21 days of making a supply, you could face two years in jail, or face a hefty fine.
Now that you know the difference between a regular invoice and a tax invoice, make sure you issue and receive correct tax invoices.

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