Page 493 - Juta's Indirect Tax

IN 83 (2) VaLue-added tax act: InterPretatIOn nOtes IN 83
• any one or more of the particulars speci ed in subsection (4) or (5) shall not be contained in a tax invoice; or
• a tax invoice is not required to be issued; or
• the particulars speci ed in subsection (4) or (5) be furnished in any other manner.
Credit and debit notes
A vendor that has issued a tax invoice in relation to a supply, and the amount shown as tax charged on the tax invoice exceeds the actual tax chargeable for the supply, is required to issue a credit note under section 21(3)(a). A debit note on the other hand must be issued where the actual tax chargeable exceeds the tax shown on the tax invoice under section 21(3)(b). A recipient of a supply, after obtaining approval from the Commissioner, may however issue a credit or debit note for a supply made to it as contemplated in section 21(4). The document issued by the recipient in this instance shall, subject to certain conditions, be deemed to be provided by the supplier under section 21(3).
Section 21(5) allows the Commissioner to direct, in instances where there would be suf cient records available to establish the particulars of a supply and the Commissioner is satis ed that it is impractical to issue a full credit or debit note, that –
• any one or more of the particulars speci ed in section 21(3) shall not be contained in a credit or debit note; or
• a credit or debit note, as the case may be, is not required to be issued.
3.1 Requirements
3.1.1 Suf cient records
The rst requirement to be considered in the application of sections 20(7) and 21(5) is that the Commissioner needs to be satis ed that there are suf cient records available to establish the particulars of a supply or category of supplies. The phrase ‘suf cient records’ is limited to the records available to establish the particulars that would be furnished in any other manner in respect of tax invoices, or omitted from tax invoices, credit or debit notes as the case may be.
Alternatively, where a tax invoice, credit or debit note is not required to be issued, suf cient records must be available to determine all the particulars of the supply. In light of the above, records may include but are not limited to –
• information stored on a database;
• a document setting out the particulars of the supply (for example, a bordereau, delivery note and so forth); or
• a contract concluded between the parties.
3.1.2 Impractical
The second requirement to be considered in the application of sections 20(7) and 21(5) is that the vendor has to satisfy the Commissioner that it is impractical to require a full tax invoice, credit or debit note to be issued or that the relevant document is not required to be issued at all. The term ‘impractical’ is de ned
as ‘not adapted for use or action; not sensible or realistic’. It is submitted that the phrase ‘not adapted for use or action’ is not applicable in these circumstances. However, ‘not sensible or realistic’ is appropriate in this context. As a result, the circumstances of the vendor must demonstrate why it is not sensible or realistic to require that a full tax invoice, credit or debit note be issued, not issued at all or that certain particulars be furnished in any other manner in the case of tax invoices. These circumstances will generally be evidenced in, but not limited to –
• the nature of the supplies made by the vendor;
• con dential agreements that require certain details to be disclosed in code form; or • accepted industry practice.
The phrase ‘impractical to issue’ implies that the provisions of sections 20(7) and 21(5) are only applicable to the vendor responsible to issue the tax invoice, credit or debit note under sections 20(1), (2) or 21(3) and (4). As a result, only the vendor making the supply or, in the case of recipient-created tax invoices, credit and debit notes, the recipient so authorised, may request for permission to apply the provisions of section 20(7) or 21(5).
4. Date of implementation
The direction by the Commissioner under section 20(7) or 21(5) will only apply to tax invoices, credit or debit notes issued or required to be issued on or after the date of approval.
5. Binding General Ruling (VAT) No. 27 ‘Application of sections 20(7) and 21(5)’
BGR 27 has been issued to prescribe the circumstances and conditions that a vendor must comply with in order to rely on the directive. Vendors not able to comply with the criteria stipulated in this BGR, may apply for a decision in writing by sending an e-mail to VATrulings@sars.gov.za or by facsimile to 086 540 9390. The application should consist of a completed VAT 301 form and must comply with the provisions of section 79 of the Tax Administration Act excluding section 79(4)(f), (k) and (6).
For ease of reference the ruling is set out below.
Ruling
The Commissioner, subject to the conditions listed below, directs under sections 20(7)(b) and 21(5)(b) that a tax invoice, credit or debit note need not be issued.
Approved conditions
The Commissioner considers that it would be impractical to require that a tax invoice, credit or debit note be issued when the transactions in question consist of a number of progressive or periodic taxable supplies made by a registered
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