How to issue tax invoices when you receive payment in forex
Tax Bulletin | 16 April, 2009 | Hot Topics:
Dear Reader
As I’m sure you’re aware, you must issue a tax invoice (for Vat purposes) for each taxable supply you make. The tax invoice must be issued in South African rand, except where your supply qualifies for Vat at the zero rate.
But what if you receive your payment in a foreign currency?
Where you have an agreement that allows you to receive payment in forex, you can issue the tax invoice in a foreign currency, but you must also show the rand equivalent of the amount and the Vat (in rands) on the invoice (Section 20(4) of the Vat Act). When converting the amount to rands, you must use the forex rate that applies on the date that you issue the invoice.
You must pay the Vat to SARS. You can then claim back the same amount if it qualifies as input tax.
Until next week.
Regards
Nothando Hlatshwayo
Managing Editor
The Practical Tax Handbook
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Editors note
Fulvia Stoltz
Tax Bulletin Editor
The Tax Bulletin is packed full of tax tips, commentary on changes to the tax landscape and is also an interactive tax forum which aims to help you efficiently manage your taxes and avoid all the traps. It is also a handy reminder of the deadlines which taxpayers have to meet.