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VAT 101 – Invoice Requirements

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Please note that this pertains to South African VAT (Value Added Tax) regulations and Best Practice requirements.

As a VAT vendor – it’s not just about ensuring that you do the calculations correctly. It’s not just about making sure that you only claim for what you are entitled to claim for. There are several other issues at stake and if you are not aware of them, chances are that you are going to end up in hot water, should SARS decide to do an audit.

Firstly, let’s just get the most important issue out of the way. You need to retain all of your tax invoices. Whether you retain them in hard copy or soft copy or both, is not the real issue – the bottom line is that you have to keep them for a minimum of 5 years. So don’t be going throwing anything out!

Here’s a basic checklist for the requirements that MUST appear on your invoice.

• The words “Tax Invoice” must appear in a prominent position. Don’t try and be clever and hide it in amongst the rest of the wording on your invoice. Rather display it together with the number of the invoice. That way there can be no misunderstanding
• The Name, address and VAT registration number of the supplier. As a supplier myself, I have found it just easier to have my VAT number quoted on all of my correspondence. That way there can be no confusion.
• The Name, address and VAT registration number of the recipient. This one is not always easy to get. Sometimes clients are reluctant to give some of their personal details. Tip. You can check you client/supplier’s VAT number on the SARS site. Beware of people posing as VAT vendors. It will affect your return.
• The invoice number and date of the invoice. Remember that the invoices have to run consecutively and therefore the dates must be consistent with those numbers. There is nothing to stop you from personalizing the invoices, as long as every number follows on from the previous number.
• A full and proper description of the goods or the services supplied. Abbreviate if you must, but ensure that your description is understandable.
• The value of the goods/services supplied. It is also a good idea to evidence the cost of the goods/services supplied and then the VAT value as a separate figure and then the total cost of the invoice (which would be the value of the goods/services and the value of the VAT added together).

Remember though that unless you are a Sole Trader and/or a partnership where the partners are natural person, you will have to pay VAT on invoices raised. This means that irrespective of whether you have been paid by your client or not, you have to pay the VAT portion of the invoice across every two months.

If you are not sure about anything VAT related please contact your nearest SARS office.