A tax invoice is a crucial document in South Africa’s VAT system. It impacts both the supplier and the recipient. Without a valid tax invoice, businesses cannot claim VAT deductions. Incorrect invoices can also lead to penalties from SARS.

Under the Value-Added Tax Act, 89 of 1991 (VAT Act):

• A supplier (vendor) must issue a tax invoice within 21 days of a taxable supply.
• A recipient (vendor) can only claim an input tax deduction if they have a valid tax invoice.

If you run a business or handle invoices, it’s essential to understand:

• When a tax invoice is needed.
• What a tax invoice must include.
• How accounting software can make compliance easier.

This guide covers all the basics, plus practical tips to keep your invoicing accurate and hassle-free.

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What Is the new VAT rate?

The VAT rate will increase to 15.5% from 1 May 2025 and to 16% from 1 April 2026. From 1 May 2025, zero-rated items will be extended to include edible offal of sheep, poultry, goats, swine and bovine animals; specific cuts such as heads, feet, bones and tongues; dairy liquid blend and tinned or canned vegetables.

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What Is a Tax-Compliant Invoice?

A tax-compliant invoice meets all legal requirements in the VAT Act. Missing details mean VAT cannot be claimed, which affects cash flow and increases tax liability.

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When Is a Tax Invoice Required?

If your business is VAT-registered, you must issue tax invoices based on these rules:

• Full Tax Invoice – Required for transactions over R5,000 (including VAT).
• Abridged Tax Invoice – Required for transactions between R50 and R5,000 (including VAT).
• No Tax Invoice Needed – For transactions R50 or less but keep a till slip or sales docket for VAT claims.

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What Must Be Included in a Tax Invoice?

Full Tax Invoice (For transactions over R5,000 including VAT)

Must include:

• The words “Tax Invoice”, “VAT Invoice”, or “Invoice”
• Supplier’s name, address, and VAT registration number
• Recipient’s name, address, and VAT registration number (if applicable)
• Invoice serial number and date
• Detailed description of goods/services
• Quantity/volume of goods/services supplied
• Value of the supply, VAT amount, and total amount payable

Abridged Tax Invoice (For transactions between R50 and R5,000 including VAT)

Must include:

• The words “Tax Invoice”, “VAT Invoice”, or “Invoice”
• Supplier’s name, address, and VAT registration number
• Invoice serial number and date
• Description of goods/services
• Value of the supply, VAT amount, and total amount payable

Address Requirements (BGR 21)

As per SARS Binding General Ruling (BGR) 21, the address on a tax invoice must be:

• The physical address of the business.
• The postal address of the business.
• Both physical and postal addresses.
• For VAT-registered branches, the branch’s address must be on the invoice.
• For zero-rated exports, the foreign recipient’s address must be included.

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Credit and Debit Notes (Section 21(3))

When to Issue a Credit Note?

• A vendor overcharges a customer.
• A return/refund reduces the original taxable amount.
• A taxable supply is cancelled.

When to Issue a Debit Note?

• A vendor undercharges a customer.
• The original invoice did not reflect the correct tax amount.

A credit/debit note is valid if it includes:

• The words “Credit Note” or “Debit Note”
• Supplier’s name, address, and VAT registration number
• Recipient’s name and address
• The original invoice number being adjusted
• The date of issue
• A detailed explanation for the adjustment
• The adjusted VAT amount and new total consideration
• Exchange rate (if the original invoice was in a foreign currency)

If the original invoice was a full tax invoice, the credit/debit note must also include all required details.

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Practical Tips for Accurate Tax Invoices

Keeping invoicing simple and compliant is easy if you:

• Track all sales and purchases – Helps with VAT returns.
• Issue invoices on time – Set a schedule.
• Use sequential invoice numbers – Prevents missing documents.
• Verify VAT registration numbers – Ensure customer details are correct.
• Use a standard template – Saves time and reduces errors.

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Why Use Accounting Software for Invoicing?

Manual invoicing is time-consuming and prone to mistakes. Accounting software can automate the process and ensure compliance with SARS. Benefits include:

• Pre-saved templates – Create tax-compliant invoices effortlessly.
• Recurring invoices – Automate invoices for repeat clients.
• Convert quotes to invoices – Faster invoicing process.
• Automated invoice reminders – Reduce late payments.
• Mobile access – Generate invoices from anywhere.

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Do I Need to Charge VAT on My Invoices?

• Mandatory VAT Registration – If annual turnover exceeds R1 million, you must register for VAT and charge it.
• Voluntary VAT Registration – If turnover exceeds R50,000 in the last 12 months, you can register for VAT.
• Turnover Tax Exemption – Businesses registered for turnover tax do not need to charge VAT.

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Check Your Invoice for Compliance

Make sure your invoices meet SARS requirements. Compare yours with our example Compare your invoice to our example Tax Invoice and Credit Note