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Tax invoices: What's legally acceptable and what isn't?

by , 05 September 2013
While SARS has made it very clear what details need to appear on a tax invoice, taxpayers often struggle with the conflicting information given by various SARS offices as to what format is acceptable. Don't take chances! Read on to discover what is and isn't acceptable when it comes to tax invoices...

Take no chances when it comes to your tax invoices.

A tax invoice is an important link in the tax and Vat chain and you must get it right. If a SARS auditor comes around for a visit, he'll check your invoices to make sure you're complying with the law.

If not, expect penalties.

The best strategy to take in this case isn't to rely on instructions from SARS offices, but to stick to the letter of the law, says the Practical Tax Loose Leaf Service.

Make sure your tax invoices comply with these legal requirements

#1: Copies and photostats of tax invoices

If you've lost or misplaced the original tax invoice issued by a supplier, he can provide a copy of the original. Just be sure to ask him to mark it clearly as a 'copy'. If the original invoice is photocopied, it must be marked 'copy' after it's been photocopied.

A copy tax invoice can also be faxed to you, but it must be printed on plain paper.

SARS won't accept an invoice that's been faxed onto old fax paper. This paper fades and the integrity of the information can't be guaranteed.

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

#2. Tax invoices by email

If you're one of the many taxpayers who take advantage of the convenience of email and send tax invoices to your clients electronically: Make sure you comply with all the requirements listed below to keep your invoices valid.

Four requirements you must meet for valid electronic tax invoices

  1. Your clients must agree in writing that they're willing to accept electronic documents. Keep a copy of this agreement for five years.
  2. The tax invoices must be transmitted in encrypted form of at least 128 bit encryption. This means the documents are secure and guards against fraud because it won't be possible for unscrupulous parties to interfere or tamper with them in any way.
  3. Both parties must retain these electronic documents and invoices for five years.
  4. The electronic document will serve as the original tax invoice.

#3: Self-invoicing

According to the Practical Tax Loose Leaf Service, sometimes certain types of taxpayers like farmers or sub-contractors have difficulty obtaining tax invoices.

Where this happens, SARS allows those vendors to apply for permission to 'self invoice'.

BUT BEWARE! This isn't open to just anyone. It's only allowed to those taxpayers who've applied to SARS to do so and SARS, after considering their circumstances has granted written permission.

Now that you know what is and isn't acceptable with it comes to tax invoices, make sure you comply.

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