Dear reader

Nowadays, most business to business invoicing is done electronically, but many businesses continue to send "tax invoices" printed on paper in addition to the electronic tax invoice, debit or credit note.

This mistake will turn you into jail bait
If you issue an electronically "tax invoice," you may not issue a printed tax invoice as well, unless it’s marked "copy" or "computer-generated copy tax invoice".

It’s a criminal offence to issue more than one "tax invoice" for a supply. The penalties are quite severe: You could get a fine up to R80 000, or spend two years in jail! To avoid this, any document you issue or print in addition to the electronic tax invoice must bear the words "copy" or "computer-generated copy tax invoice."

Electronic invoices – the ins and outs
The electronic "tax invoice" issued to the recipient of a supply (the purchaser) is the original "tax invoice." In terms of Section 20(1) of the Vat Act, a "tax invoice" is a document notifying the purchaser of an obligation to make payment and meeting the requirements of Section 20(4) or (5). A document may be printed on paper or may be in electronic form. This fact is stated in the Electronic Evidence Act.

The reason you may not issue two tax invoices for one supply is that the purchaser may, accidentally or on purpose, claim the Vat twice as input tax. While at SARS, I saw this happen with a tax invoice for R400 000 input tax! Having the word "copy" on any copy of the tax invoice will alert the purchaser and the SARS auditors that the Vat may already have been claimed as input tax.

Electronic invoices must be kept for 5 years!
The seller and the buyer aren’t required to print out hard copies of electronic "tax invoices" because electronic tax invoices constitute valid tax invoices. They must be kept in electronic (but readable) form for five years.

8 rules for issuing and using electronic invoices

1. You can issue electronic tax invoices, debit notes and credit notes.
2. The eight vital pieces of information that apply to hard copy invoices must also appear on electronic invoices (Please refer to chapter T 02/004 in your Practical Vat Loose Leaf for more information).
3. Your recipients must confirm in writing that they’re willing to receive electronic tax invoices. You must keep this written confirmation on record for five years.
4. Your electronic tax invoices must be issued encrypted with 128-bit encryption technology, which will make it impossible for the receiver to tamper with it or alter it in any way.
5. Both seller and buyer must keep the documents in a readable and encrypted form for five years from the date of the supply.
6. If a service provider is used, that person must also retain the documents for five years.
7. The transmitted electronic document will constitute the original tax invoice. Hard copies printed from the system must bear the words “computer generated copy tax invoice”. ALL further copies must also bear these words.
8. NO other tax invoice, debit or credit notes may be issued for the supply, unless it is marked as a copy of the original document.

Save on postage, save on envelopes, save on paper – use electronic invoicing and save the forests!

Peter Franck

Editor-in-Chief Practical Vat Loose Leaf