Tax Invoice in South Africa: What It Must Include
Short answer
A tax invoice is a document a VAT-registered business issues for a taxable supply, within 21 days. Above R5 000 including VAT it must be a full tax invoice. At R5 000 or less, an abridged one will do. Your client needs it to claim the VAT back.
What is the difference between a tax invoice and a regular invoice?
Only a VAT vendor issues this document, so a business not registered for VAT cannot issue one and must not charge VAT. The VAT Act, section 1 defines it this way: “tax invoice” means “a document provided as required by section 20”. The Act allows the title “Tax invoice”, “VAT invoice” or “Invoice”.
Timing matters too. Under section 20(1), a registered vendor “must within 21 days of the date of that supply issue a tax invoice”. VAT is charged at 15%, according to SARS.
Your client needs this document to claim the VAT back as input tax. Section 16(2)(a) requires “a tax invoice or debit note or credit note in relation to that supply” that is “held by the vendor making that deduction”.
A pro forma invoice is not one. Your client cannot use it to claim VAT. They need the one you issue once you have made the supply. The Act does not mention pro forma invoices; this follows from sections 20(1) and 16(2)(a).
What are the requirements for a tax invoice in South Africa?
The requirements depend on the amount including VAT. Above R5 000, you need the full version, which section 20(4) says must be “in the currency of the Republic”. At R5 000 or less, an abridged one will do. The Act’s words for that case are that the consideration “does not exceed R5 000”.
The R5 000 and R50 lines are on the total including VAT. A zero-rated supply always needs the full version.
At R50 or less, paid in money, you don’t have to issue one. You must still give your client a document SARS accepts (section 20(6)).
Issue only one for each supply. If it is lost, send a copy clearly marked “copy”.
SARS can direct that some details may be left out, or that none is needed, when that is impractical and other records are enough. That needs a direction from SARS (section 20(7)). SARS sets out the 21-day limit, the R5 000 and R50 lines and the required details on its tax invoices page.
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How to make a simple invoice?
Put the required details in a consistent layout, then number and date it. Work through these in order:
- Decide whether you are a VAT vendor. If not, your invoice carries no VAT.
- Add the title: “Tax invoice”, “VAT invoice” or “Invoice”.
- Add your business name, address and VAT number.
- Add your client’s name, address and VAT number, if they are registered.
- Give it a number of its own, in a series.
- Add the date you issue it.
- Describe what you supplied and the quantity.
- Show the amount before VAT, the VAT and the total, in rand.
The free invoice generator and the invoice template give you the layout. The VAT calculator splits the VAT for you. The full list of details is in section 20(4).
A worked example: full and abridged invoices in rand
Both examples are illustrative. The VAT numbers are placeholders.
Example 1: the full version. Mahlangu Solar (example), a VAT vendor in Polokwane, installs a solar geyser for Sipho Dlamini’s accounting practice in Pretoria (example), also a VAT vendor. The total is above R5 000, so a full one is needed. It says “Tax invoice” and shows the client’s name, address and VAT number ([VAT no.]) and the quantity.
Example 2: the abridged version. Thandi Nkosi (example) runs a bakery in Soweto and is a VAT vendor. She sells a wedding-cake order. The total is R5 000 or less, so an abridged invoice will do. It can leave out the client’s details and the quantity.
| Example 1 | Example 2 | |
|---|---|---|
| Price before VAT | R10 000 | R4 000 |
| VAT at 15% | R1 500 | R600 |
| Total | R11 500 | R4 600 |
| Invoice needed | Full | Abridged |
The test is on the total including VAT. If Thandi’s order were R5 000 before VAT, the total would be R5 750 and she would need a full invoice. The rate comes from SARS and the thresholds from section 20.
Checklist: full vs abridged
| Detail | Full (above R5 000) | Abridged (R5 000 or less) |
|---|---|---|
| The words “Tax invoice”, “VAT invoice” or “Invoice” | Yes | Yes |
| Your business name, address and VAT number | Yes | Yes |
| Client name and address | Yes | May be left out |
| Client VAT number, if registered | Yes | May be left out |
| Invoice number in a series | Yes | Yes |
| Date issued | Yes | Yes |
| Description, saying if goods are second-hand | Full and proper description | A description |
| Quantity or volume | Yes | May be left out |
| Amount before VAT, VAT and total in rand | Yes | Yes |
Source: VAT Act, section 20. Before you send, tick off:
- Are you a VAT vendor?
- Are you issuing it within 21 days of the supply?
- Is it the only one for this supply?
- If you reissue a lost one, is it marked “copy”?
FAQ
What is the difference between an invoice and a receipt?
An invoice asks a client to pay for goods or services supplied. A receipt confirms that payment was received. A VAT vendor’s version is a separate document with the details required by section 20 of the VAT Act. You can make a receipt with the receipt maker or the receipt template.
Can I issue a tax invoice if I am not registered for VAT?
No. Only a VAT vendor issues them or charges VAT, so an invoice from a business not registered for VAT carries no VAT. Your client cannot claim VAT back on it.
Is a pro forma invoice a tax invoice?
No. A pro forma invoice is not one, so your client cannot use it to claim VAT. They need the one you issue once you have made the supply.
How long do I have to issue a tax invoice?
A registered vendor must issue one within 21 days of the date of the supply. Issue just one for each supply. If it is lost, send a copy clearly marked “copy”.
Do I need a tax invoice for a purchase of R50 or less?
If the payment is in money and the total is R50 or less, the supplier does not have to issue one. The supplier must still give you a document SARS accepts.