It's important to understand there's a difference between an invoice and a tax invoice.
Invoice vs. tax invoice: Here's what you need to know
Invoice: An invoice is any document that notifies a person of his or her obligation to make a payment.
The Loose Leaf Service adds, 'you need it to claim any input tax credits in your Vat return for taxable supplies you've received, 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 and phone usage.'
Be warned: 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 a fine for R80 000.
The bottom line: The most important link in the Vat chain is the Tax invoice. Get it wrong, and you won't be able to deduct input tax on your purchases. Knowing the difference between an invoice and tax invoice will help ensure you comply with the Vat Act.