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When dealing with foreign clients, there are two ways to invoice them

by , 11 September 2014
If you deal with foreign clients, this article is for you.

You must issue valid tax invoices to your clients. This isn't optional, it's compulsory!

Now there are two types of invoices you can issue and it's important that you issue the right one. If you don't, SARS will slap you with additional taxes and penalties.

Because we know you can't afford to take that risk, we're telling you about the two ways to invoice your foreign clients.

Take a look at them below so you'll invoice your clients correctly and avoid penalties.

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Two ways to invoice foreign clients

When you deal with foreign clients, there are two ways to invoice them depending on if the supply is zero-rated or not.

#1: If your supply is zero-rated, issue the tax invoice in the foreign currency.

Here's a list of some of the zero-rated supplies:
  • Exports;
  • Business sold as a going concern;
  • Gold to the banks;
  • Certain agricultural goods;
  • Petrol and diesel;
  • Certain foodstuffs;
  • Gold coins not set as jewellery;
  • Paraffin;
  • Triangular supplies;
  • International transport;
  • Services to land situated in other countries;
  • Services to foreign going ships or aircraft; and
  • Services to non-resident clients.
#2: If your supply isn't zero-rated, you must issue both abbreviated and full invoices in rands (but you can write the foreign currency equivalent on the invoice).

If you fail to invoice your foreign clients correctly, you'll be breaking the Tax Administration Act and SARS will slap you with penalties. Make sure that doesn't happen now that you know how to invoice your clients.

PS: The rules for foreign supply tax invoices sound easy enough in theory, but when you actually have to send invoices to foreign clients, it gets confusing. Have a look at the Practical Vat Loose Leaf Service. It'll give you examples so you can see how to do this right under every circumstance.

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