1. Second-hand goods
The general rule is that a vendor must hand in tax invoices before being allowed to claim any tax, but there are a few exceptions. If a vendor purchases second-hand goods from a non-vendor, the vendor needs to record the following transaction details:
• Name, address and ID number of the supplier (verify ID number with ID book)
• Transaction date
• Quantity or volume of goods
• Description of goods
• Supplier’s declaration that the supply is not taxable
• If the value of the goods amount to R1000 or more, the vendor must keep a copy of the supplier’s ID.
2. Repossession of Goods
When goods are repossessed that are still under an instalment credit agreement, the following applies:
• If the goods are repossessed from a vendor, the person responsible for the repossession must create a tax invoice for the debtor
• If the goods are repossessed from a non-vendor, the person responsible for the repossession must keep all details as per point 1 (Second-hand goods)
3. Other cases
• For purchase prices less than R50, no tax invoice is required
• If the Commissioner is satisfied with the records, permission may be granted for tax invoices to not be issued should it appear impractical
• Supporting documentation to claim VAT on goods imported is a bill of entry accompanied by a proof of payment.
• IF an agent holds the tax invoices, the schedule from the agent must be held.
4. Electronic Tax Invoices
The requirements for electronic tax invoices are as follows:
• The arrangement applies to tax invoices and debit or credit notes
• Recipients must confirm in writing that they wish to receive electronic invoices
• These invoices must be encrypted with atleast 128 bit encryption.
• All electronic invoices must be kept for a period of 5 years, also when a service provider is used
• If the electronic copy is printed, it must bear the words “Computer generated copy tax invoice”
5. Lost or Misplaced Tax Invoices
If a tax invoice is lost, you may not request another from the supplier, unless it is clearly marked as a copy.
If faxed, the tax invoice must be printed by a plain paper facsimile machine.
6. Alternatives to Tax Invoices
When applying for an alternative to a tax invoice the following requirements must be met:
• Sufficient records must be available to establish the particulars of the supply
• It must be proven that it is impractical to provide a tax invoice
If the following criteria are met, it will not be necessary to obtain a ruling regarding the issuing of tax invoices:
• The transaction must include a number of taxable supplies by a registered vendor with a written contract in place, stating the supplier’s name, address and VAT registration
• The recipient must have a copy of such contract
• The recipient must retain proof of payment i.e paid cheques or bank statements
7. Tax Invoices for mixed supplies
A full tax invoice must be issued if the supply is zero-rated. If the supply is exempted from VAT, no tax invoice is to be issued. If various supplies are made by the same supplier and the supply is treated individually for VAT purposes, the tax invoice must clearly distinguish between the differences plus the tax charged on each supply.
8. Tax Invoices prepared by the recipient
In the case where a supplier takes produce to the vendor that will only be sold at a later stage and the price obtained for the goods depends on factors outside the control of the supplier, SARS may permit the recipient to issue a tax invoice for the supply. The vendor must have written authorization from SARS before applying this, providing the following details:
• Description of the nature of the businesses of both the supplier and the recipient
• Full description of transactions
• Existing invoicing procedures currently being followed
• An undertaking by the recipient to comply with all administrative requirements.
9. Agents and Auctioneers
The VAT on transactions concerned must be accounted for by the principal, seeing as an agent merely acts on behalf of the principal. However, should an agent make a supply on behalf of another vendor, the agent may issue a tax invoice reflection its details.
If an agent receives a supply on behalf of a principal, the agent’s details are to reflect on the tax invoice and the principal may claim input tax only if he/she is in possession of the tax invoice.
An agent may ask for a tax invoice if a vendor makes a supply to the agent. The agent must in all above-mentioned cases maintain sufficient records and notify its principal in writing of the following:
• Description of goods supplied and
• Quantity or volume of goods supplied and
• Value of the supply, tax charged and consideration for the supply OR
• Statement including a charge in respect of tax and the rate of the tax charged.
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