In order to be able to claim an input tax deduction, the VAT Act requires a vendor to obtain and retain a \u201cdocument\u201d that constitutes a valid tax invoice. The Act furthermore provides that a \u201cdocument\u201d includes any printout of information generated, sent, received, stored, displayed or processed by electronic means. It would appear, therefore, that a tax invoice sent by email would qualify as a valid tax invoice if the formal requirements for a valid tax invoice have been met.<\/p>\n
The action of sending documentation electronically is however, not free from regulation. All applicable legislation and regulations must be considered and complied with, in order for e-invoices to be lawfully binding. Registered vendors wishing to submit an electronic invoice must comply with Section 20 of the VAT Act, read with the VAT 404 Guide for Vendors and VAT NEWS 20 (both of which are available on the SARS website<\/a>. As per the VAT 404 Guide for Vendors, electronic invoicing is also required to comply with the Electronic Communications and Transactions (ECT) Act. Refer below for a summary of these requirements.<\/p>\n <\/p>\n As per Section 20(4) of the VAT Act, a tax invoice for an amount exceeding R5 000 (full tax invoice) shall be in the currency of the Republic and shall contain the following particulars:<\/p>\n The guide confirms the requirements for a VAT invoice as stipulated by the VAT Act and in addition makes the following reference to electronic invoices in Chapter 11:<\/p>\n \u201cThe VAT Act includes specific requirements on the issuing of tax invoices, debit and credit debit notes, and the storage of these documents.\u00a0 Although\u00a0 the\u00a0 requirements\u00a0 were\u00a0 drafted\u00a0 when\u00a0 most\u00a0 vendors\u00a0 followed\u00a0 the traditional\u00a0 manner\u00a0 of\u00a0 physically\u00a0 issuing\u00a0 and\u00a0 retaining\u00a0 documents\u00a0 in\u00a0 hard-copy\u00a0 format,\u00a0 they\u00a0 are\u00a0 equally applicable\u00a0 to\u00a0 vendors\u00a0 that\u00a0 do\u00a0 \u201ce-invoicing\u201d.<\/p>\n In\u00a0 VAT News\u00a0 20\u00a0 (September 2002)\u00a0 and\u00a0 VAT\u00a0 News\u00a0 22 (September 2003),\u00a0 guidelines\u00a0 were\u00a0 provided\u00a0 in\u00a0 this\u00a0 regard\u00a0 and\u00a0 it\u00a0 was\u00a0 stated\u00a0 that\u00a0 vendors\u00a0 do\u00a0 not\u00a0 need\u00a0 prior approval\u00a0 from\u00a0 the\u00a0 Commissioner\u00a0 to\u00a0 implement\u00a0 e-invoicing.\u00a0 However,\u00a0 it\u00a0 should\u00a0 be\u00a0 noted\u00a0 that\u00a0 generally\u00a0 the electronic\u00a0 transmission\u00a0 and\u00a0 retention\u00a0 of\u00a0 documents\u00a0 is\u00a0 regulated\u00a0 by\u00a0 the\u00a0 Electronic\u00a0 Communications\u00a0 and Transactions Act No. 25 of 2002 (the ECT Act). SARS is therefore not in a position to issue rulings or provide advice on whether any EDI systems or any other electronic communications meet the technical specifications of the ECT\u00a0 Act.\u00a0 As\u00a0 the\u00a0 National\u00a0 Department\u00a0 of\u00a0 Communications\u00a0 regulates\u00a0 the\u00a0 ECT\u00a0 Act,\u00a0 it\u00a0 is\u00a0 the\u00a0 competent authority to approach for advice in this regard. Vendors wishing to implement an electronic system must ensure that they do not replace their existing paper-based documentary systems before ensuring that they meet all the requirements.\u201d<\/p>\n <\/p>\n The VAT news Issue 20 from September 2002 made specific reference to the issuing of electronic tax invoices. The requirements under section 20(4) of the act were once again confirmed but in addition the following new requirements were specifically mentioned for electronic invoices :<\/p>\n <\/p>\n As per the VAT 404 Guide electronic invoicing is required to comply with the Electronic Communications and Transactions (ECT) Act. The ECT Act provides that any requirement in law for a document or information to be in writing will be met if the document or information is in the form of a data message, and is accessible in a form usable for subsequent reference. E-invoices will be valid in law and binding if the legal requirements prescribed under the ECT Act are met.<\/p>\n <\/p>\n These requirements include that:<\/p>\n \u201cClause 14. Original<\/strong><\/p>\n <\/p>\n \u201cClause 16. Retention<\/strong><\/p>\n <\/p>\n The requirements imposed by SARS regarding e-invoicing are designed to facilitate effective auditing of e-invoices and to ensure conformity between paper and e-invoices. Failure to comply with these requirements may result in SARS imposing penalties and interest on non-compliant vendors. There are still no specific guidelines issued by SARS regulating e-invoicing however it is recommended that companies conform with the requirements of VAT Act (and all subsequent discussion papers) and the ECT Act in order to ensure compliance and avoid possible penalties.<\/p>\n <\/p>\n In order to comply :<\/p>\n <\/p>\n All companies that utilise CapiLink enjoy full compliance with regards to all current legislation and guidelines for e-Invoicing.<\/p>\n <\/p>\n [heading header_type=”h1″ sub_header_size=”normal” header_size=”normal” header_weight=”hairline” header_align=”center” header_condensed=”not-condensed” header_underline=”bordered” header_underline_size=”bordered-normal” margin_top=”normal-top” margin_bottom=”normal-bottom” scroll_animation=”fadeInUp” scroll_animation_delay=”0″]Specifically CapiLink addresses the requirements as follows:[\/heading]<\/p>\n [divider visibility=”hidden” xs_height=”24″ sm_height=”24″ md_height=”75″ lg_height=”75″]<\/p>\n","protected":false},"excerpt":{"rendered":" In order to be able to claim an input tax deduction, the VAT Act requires a vendor to obtain and retain a \u201cdocument\u201d that constitutes a valid tax invoice. The Act furthermore provides that a \u201cdocument\u201d includes any printout of information generated, sent, received, stored, displayed or processed by electronic means. … Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":1127,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"yasr_overall_rating":0,"yasr_post_is_review":"","yasr_auto_insert_disabled":"","yasr_review_type":"","footnotes":""},"categories":[40,41,50,51],"tags":[52,53,44,54,55,56,57,58],"class_list":["post-674","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-blogs","category-capilink","category-capisol","category-compliance","tag-e-invoicing","tag-electronic-communications","tag-electronic-document-management","tag-electronic-invoice-requirements","tag-invoice-requirements","tag-sars-requirements","tag-vat","tag-vat-act"],"yasr_visitor_votes":{"stars_attributes":{"read_only":false,"span_bottom":false},"number_of_votes":0,"sum_votes":0},"_links":{"self":[{"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/posts\/674","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/comments?post=674"}],"version-history":[{"count":1,"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/posts\/674\/revisions"}],"predecessor-version":[{"id":5052,"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/posts\/674\/revisions\/5052"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/media?parent=674"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/categories?post=674"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.projects.prycision.com\/capisol\/wp-json\/wp\/v2\/tags?post=674"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}VAT Act:<\/h2>\n
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VAT 404 Guide for Vendors<\/h2>\n
VAT News Issue 20<\/h2>\n
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Electronic Communications and Transactions(ECT) Act<\/h2>\n
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Summary<\/h2>\n
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CapiLink Compliance<\/h2>\n
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\n \n<\/th>\n Requirement<\/th>\n CapiLink Compliance<\/th>\n<\/tr>\n<\/thead>\n \n 1.<\/td>\n The original document generated by the accounting system must be a valid tax invoice, as defined above<\/td>\n CapiLink assists companies with the invoice structure and content to ensure requirements are met from the accounting system.<\/td>\n<\/tr>\n \n 2.<\/td>\n Tax invoices must be sent in encrypted format (at least 128 bytes), over a secure line or contain an electronic signature.<\/td>\n All documents are 128 byte encrypted and signed with a digital certificate<\/td>\n<\/tr>\n \n 3.<\/td>\n The recipient of the supply must confirm in writing that he or she will accept electronic invoices for the purpose of claiming input tax.<\/td>\n CapiLink customers are encouraged to complete this step. CapiLink can assist by sending out forms to the customers confirming their acceptance of electronic documentation.<\/td>\n<\/tr>\n \n 4.<\/td>\n No other tax invoice may be issued and all copies extracted by the recipient must bear the words \u201ccopy tax invoice\u201d<\/td>\n CapiLink changes the words on all documents from the accounting system to include COPY to ensure all subsequent copies contain this word<\/td>\n<\/tr>\n \n 5.<\/td>\n The data message will constitute the original document (as is the requirement for a valid tax invoice) if it passes an assessment, which, in essence, entails the verification of whether the information has remained complete and unaltered in the light of the purpose for which the information was generated and having regard to the general circumstances<\/td>\n Information is sent to CapiLink servers via encrypted and secure FTP services which ensures information is complete and not altered from the client source to the CapiLink servers.<\/td>\n<\/tr>\n \n 6.<\/td>\n Information required to be retained by law is accessible for subsequent reference.<\/p>\n \n
All information is stored on the CapiLink servers for a period of 5 years in the original formats as sent to the customer.<\/td>\n<\/tr>\n \n 7.<\/td>\n The origin or destination of the e-invoice and the date\/time it was sent or received is determinable<\/td>\n CapiLink stores the email address with date and time a document is sent to a customer.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n