Page 433 - Juta's Indirect Tax

IN 56 (2) VaLue-added tax act: InterPretatIOn nOtes IN 56 (2)
as a result thereof, a tax invoice has been issued re ecting an incorrect amount of tax charged on the supply. The credit or debit note issued by the vendor must contain the particulars stipulated in section 21(3).
Similar to recipient-created tax invoices as discussed above, a supplier may in certain circumstances beyond the supplier’s control be unable to issue a credit or debit note. Provision is therefore made for the Commissioner to allow the recipient of a supply to issue a credit or debit note for a previous supply made by the supplier.
Approval for the recipient of a supply to issue a credit or debit note for a previous supply made by a supplier will only be granted if the recipient has received approval to issue recipient-created tax invoices. Furthermore, the recipient must have issued a recipient-created tax invoice for the supply for which a recipient-created credit or debit note is to be issued.
4.3 Rebates
Rebates are generally allowed by suppliers to their customers and as such are represented in different forms which are dependent on the circumstances of each case. In this regard, rebates in some instances may reduce the consideration for the goods or services that were supplied by the supplier whereas some rebates may be payment for a separate taxable supply of services by the customer to the supplier. A credit note must be issued if the consideration for a supply is reduced in relation to the original tax invoice issued.
5. Binding General Ruling (VAT) No. 15 (Issue 2)
BGR (VAT) No. 15 (Issue 2) (BGR 15), which is effective from 1 April 2013, sets out the requirements that a vendor must satisfy in order to issue recipient-created tax invoices, credit and debit notes. A vendor that satis es these requirements does not have to apply for prior approval from the Commissioner to issue recipient-created tax invoices, credit and debit notes. The approval and conditions referred to in paragraph 2 of BGR 15 are discussed below.
5.1 Ruling
This ruling constitutes a BGR issued under section 89 of the TA Act. A tax invoice, credit or debit note issued by a supplier in respect of a taxable supply for which a recipient has been granted approval to issue a recipient-created tax invoice, credit or debit note, as set out in 5.2 and 5.3 below, shall be deemed not to be a tax invoice, credit or debit note for the purposes of the VAT Act.
5.2 Tax invoices
The Commissioner’s approval is hereby granted to vendors to issue recipient-created tax invoices, where the recipient – • determines the consideration for the supply of the goods or services; and
• is in control of determining the quantity or quality of the supply, or is responsible for measuring or testing the goods
sold by the supplier.
5.3 Credit and debit notes
A vendor that has been granted approval in terms of 5.2 to create and issue recipient-created tax invoices is hereby granted approval by the Commissioner to create and issue recipient-created credit and debit notes relating to the recipient-created tax invoices issued.
5.4 Conditions for Commissioner’s approval
The approval set out in 5.2 and 5.3 is conditional upon the recipient, being a vendor,–
(a) acquiring and retaining proof of the supplier’s VAT registration number;
(b) entering into an agreement with the supplier that the supplier shall not issue a tax invoice, credit or debit note in
respect of any taxable supply to which the approval applies;
(c) issuing a recipient-created tax invoice that complies with the provisions of section 20(4) or 20(5) or a credit or debit
note that complies with the provisions of section 21(1) and (3), as the case may be;
(d) providing the recipient-created tax invoice, credit or debit note to the supplier and retaining a copy thereof;
(e) issuing the recipient-created tax invoice within 21 days from the date of the supply being made; and
(f) retaining a copy of the recipient-created tax invoice, credit or debit note for a period contemplated in section 29 of
the TA Act and section 55 of the VAT Act.
6. General
Vendors who issue recipient-created tax invoices or debit notes, and who do not comply with BGR 15, are not entitled to deduct input tax as the documentary proof (that is, the non-approved recipient-created tax invoice or debit note) is not in compliance with section 16(2). A deduction of input tax by the vendor on a non-approved recipient-created tax invoice or debit note, will result in the Commissioner raising assessments to disallow the input tax deducted based on such documents. The vendor deducting input tax on these non-approved recipient-created tax invoices and debit notes, will be liable for penalties and interest.
Annexure B, Annexure C, Annexure D and Annexure E are attached to provide assistance to vendors regarding the requirements stated in BGR 15 and 5.2 or 5.3 of this Note.
7. Conclusion
This Note sets out the criteria that have to be met in order for the Commissioner to approve the issuing of recipient- created tax invoices, credit and debit notes. Vendors failing to comply with the criteria stipulated in BGR 15 and 5.2 to 5.4 of this Note, may apply in writing for approval to issue recipient-created tax invoices, credit and debit notes by sending an e-mail to VATRulings@sars.gov.za or by facsimile to 086 540 9390. In this regard a clearly motivated application complying with the provisions of section 79 of the TA Act, 2011 excluding section 79(4)(f), (k) and (6), accompanied by the prescribed VAT301 form must be submitted.
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