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Vendor (Pty) Limited Tax Invoice No: 2014/1235 Highfield Building VAT Registration No: 4321123450 80 Club Avenue

Norwood 2192

Date: 15 February 2014

DATE DESCRIPTION OF GOODS / SERVICES R

15/02/2014 _{Widgets 300 × 200} 300

VAT @ 14% 42

Total 342

The following important points should also be noted with regard to tax invoices:

• A vendor must issue a tax invoice to the recipient within 21 days of the supply having been made for which the consideration for the supply exceeds R50 (whether the recipient has requested this or not). This also applies when the vendor’s agent issues the tax invoice on behalf of the vendor.108

• If the consideration in money for the supply is R50 or less, a tax invoice is not required. However, a document such as a till slip or sales docket indicating the VAT charged by the supplier will be required to verify the input tax deducted.

• An abridged tax invoice (refer to the example above) may be issued if the consideration for a taxable supply exceeds R50 but does not exceed R5 000.

• A tax invoice must be in South African currency, except for a zero-rated supply (for example, goods exported) or in the case of certain supplies of electronic services by non-resident suppliers. A full tax invoice (refer to the example on the previous page) must be issued in respect of zero-rated supplies, even if the consideration is less than R5 000. A full tax invoice must indicate the recipient’s VAT registration number (if that person is a vendor).

• If a vendor fails to deduct input tax in respect of a particular tax period, it may be deducted in a later tax period, but limited to a period of five years from the end of the tax period during which the tax invoice should have been issued for the supply concerned.

• The details to be contained on tax invoices issued by non-resident suppliers of certain electronic services will be set out in a regulation. At the time of publishing this guide, the regulation had not yet been finalised.109 However, in the interim, a binding general ruling has been published to set out, amongst others the information to be contained on a tax invoice, debit or credit note. Refer to Binding General Ruling No. 28 dated 26 March 2015 on the

SARS website for more information.

13.4

TAX INVOICES PREPARED BY THE RECIPIENT (RECIPIENT-CREATED

INVOICING)

In some instances the consideration for a supply is determined by the recipient of the goods/services rather than by the supplier. An example of this is where a farmer (the supplier) takes produce to a co- operative which will only be sold at a later stage, once the quality and quantity of the produce has been determined. Since the price that will eventually be obtained for the goods depends on factors outside the farmer’s control (and often the co-operative merely acts as agent for the supplier), the farmer is not in a position to issue an invoice or tax invoice for the produce when it is delivered for sale.

Section 54, as amended with effect from 1 April 2015. 109

VAT 404 – Guide for Vendors Chapter 13 In such cases, SARS may permit the co-operative (recipient) to issue the tax invoices and any debit

and credit notes relating to supplies instead of the supplier. This is referred to as “recipient-created

invoicing” or “self-invoicing”.

Paragraph 5 of Interpretation Note 56 (Issue 2) dated 31 March 2014 “Recipient-Created Tax Invoices; Credit and Debit Notes” (IN 56) contains a binding general ruling (BGR) which was reproduced in Binding General Ruling No. 15 (Issue 2) dated 31 March 2014 (BGR 15) that essentially grants approval to recipient vendors to apply self-invoicing where the recipient determines the consideration for the supply of the goods or services and is in control of determining the quantity or quality of the supply, or is responsible for measuring or testing the goods sold by the supplier. The BGR provides that in such cases, the recipient, instead of the supplier, may issue any tax invoices, credit and debit notes for the supplies concerned. This is on condition that the parties to the transaction comply with the requirements set out in IN 56 or BGR 15. Vendors that want to apply self- invoicing procedures, but are unable to comply with the requirements stipulated in IN 56 or BGR 15 will have to obtain written authorisation from SARS before they will be allowed to apply this method of invoicing.

Note that approval for self-invoicing procedures will not be granted if the purpose is merely to facilitate the obtaining of a tax invoice by the recipient. Approval will only be granted in the case of those industries and transactions where an effective self-invoicing system has traditionally been followed in the past.

The written application to apply self-invoicing must provide the following details –

• a description of the nature of the businesses respectively carried on by the supplier and the recipient;

• a full description of the transactions in respect of which self-invoicing is required;

• the existing invoicing procedures being followed for such transactions; and

• an undertaking by the recipient that they will comply with the administrative requirements with regard to tax invoices, debit notes or credit notes. The applicant must also obtain and retain the written agreement of each affected supplier in this regard (vendors) as well as their written confirmation that they will comply with the said administrative requirements.

13.5

TAX INVOICES FOR MIXED SUPPLIES

As mentioned in paragraph 13.3 above, a full tax invoice must be issued in respect of a zero-rated supply. There may, however, be a situation where various supplies are made by the same supplier and where each supply is treated differently for VAT purposes. Should this occur, the tax invoice must clearly distinguish between the various supplies and indicate separately the applicable values, and the tax charged (if any) on each supply.