Vat for commission agents and brokers is very tricky and it's easy to get wrong, especially if you want to make use of self-invoicing and don't know the Vat Act.
But don't fret. The Practical Vat Loose Leaf Service explains all you need to know about self-invoicing below.
What is self-invoicing and how does it work?
According to the Loose Leaf Service, self invoicing or 'recipient invoicing' is where the buyer of the goods creates his own tax invoice to claim Vat.
So, essentially the buyer will make out a tax invoice with his own and the seller's details on it. He gives a copy of it to the seller, who must declare the Vat.
Please note that both parties must agree to this and agree that the seller of the goods won't also go and issue a tax invoice.
If you want to use the 'self-invoice' process, you MUST get written permission to do so from the SARS office where you're registered.
You must send a letter asking for permission and explaining why you need to do self-invoicing.
To make it easier for you, here's a sample letter you can send to SARS to request the use of self-invoicing.
Here's a sample letter you can send to SARS to request the use of self-invoicing
The SARS Office where you are Vat-registered
VALUE-ADDED TAX: REQUEST FOR RECIPIENT CREATED INVOICING (SELF-INVOICING)
We are writing to you to request approval in the practice of recipient created invoicing or self-invoicing. We set out our request more fully below.
We trust you will view this application favourably.
Remember, your suppliers must also confirm in writing that you'll issue tax invoices on their behalf, and that they won't issue tax invoices in respect of such supplies.
If you want to make use of the self-invoicing process, make sure you comply with Vat law.
Enjoyed this article? Subscribe to receive these free articles in your inbox daily