What Makes a Valid Tax Invoice?

Every VAT-registered business issues invoices. Far fewer have checked whether those invoices actually meet SARS requirements.

It matters because input VAT can only be claimed on a valid tax invoice. If a supplier invoice is missing a required field, SARS can disallow the claim, even though the expense was genuine and the VAT was paid.

The requirements are set out clearly. Here they are, and here is how to check your own invoice template against them.

There Are Two Types of Tax Invoice

Which one applies depends on the value of the supply.

Over R5,000

A full tax invoice is required.

R50 up to R5,000

An abridged tax invoice is acceptable. It carries fewer required fields than a full invoice.

R50 or less

No tax invoice is required. SARS does require you to keep a document such as a till slip or sales docket showing the VAT charged, so that the input tax deduction can be verified.

If you are claiming input VAT on a purchase above R5,000 and the supplier gave you an abridged invoice, that is a problem worth picking up before SARS does.

What a Full Tax Invoice Must Contain

For any supply exceeding R5,000, the invoice must include all of the following:

• The words 'Tax Invoice', 'VAT Invoice' or 'Invoice' displayed on the document.
• The supplier's name, address and VAT registration number.
• The recipient's name and address, along with their VAT registration number where the recipient is a registered vendor.
• A serial number and the date the invoice was issued.
• An accurate description of the goods or services supplied.
• The quantity or volume supplied.
• The value of the supply, the amount of VAT charged, and the consideration.

Every item on that list is a requirement, not a preference. A missing VAT number or an invoice that never says 'Tax Invoice' anywhere on it is enough to put the claim at risk.

What an Abridged Tax Invoice Must Contain

For supplies between R50 and R5,000, the requirements are shorter:

• The words 'Tax Invoice', 'VAT Invoice' or 'Invoice' on the document.
• The supplier's name, address and VAT registration number.
• A serial number and the date the invoice was issued.
• An accurate description of the goods or services supplied.
• The value of the supply, the amount of VAT charged, and the consideration.

The difference is that an abridged invoice does not need the recipient's details or the quantity supplied. Everything else still applies.

Where Businesses Get Caught

The common problems we see are small and easily fixed, which is exactly why they go unnoticed for years.

The document says 'Invoice' but functions as a quote or a statement. The wording on the document is a requirement, and it needs to be on the document itself.

The supplier's VAT number is missing. This is a common reason an input VAT claim gets disallowed. If a supplier invoice has no VAT number on it, the claim is at risk.

The description is too vague. The requirement is an accurate description of what was supplied, so a single word like 'consulting' or a line reading 'services rendered' may not be enough on its own.

There is no serial number, or numbers repeat. The requirement is an individual serialised number, so each invoice needs its own.

VAT is shown as a total but not separated. The value of the supply, the VAT, and the total all need to appear.

Invoices are issued late. The 21-day rule applies whether or not the client is in a hurry to pay.

Check your own template against the lists above. Then check what your suppliers are sending you, because their mistakes become your disallowed claims.

Most of these are a ten-minute fix to an invoice template, done once, and then correct for every invoice thereafter.

The cost of not fixing them only becomes visible when SARS asks to see the supporting documents for a VAT claim, and by then the invoice is already issued.

Important: This article provides general guidance for South African businesses. Every situation is unique. Consult a qualified accounting professional for advice specific to your circumstances.