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Value Added Tax (VAT) – Tax Invoice requirements
CUSTOMS AND INLAND REVENUE
Tax invoices are often referred to as the “corner stone” of the VAT system, this is because they provide a trail or record of most transactions undertaken by registered persons (particularly those transactions involving claims for tax paid). It is important to note that a tax invoice must be physically held to substantiate a tax claim by a registered person.
A tax invoice is a legal document for tax purposes and section 21(3) of the VAT Act provides a tax invoice must contain the particulars specified in the prescribed form. This means that the Director must publicly state what specific information is required on a tax invoice. The information required on a tax invoice is set out in the VAT Guide and other publications produced by the VAT Office and it states that a tax invoice must include the following information:
• the words “Tax Invoice” in a prominent place
• the name (or trade name), address and CT number of the supplier
• the name of the recipient
• the date the invoice was issued
• a description of the goods and/or services supplied
• the quantity or volume of the goods and/or services supplied. (e.g. litres of petrol, hours of labour, or kilos of meat)
• a serialized invoice number
It must also have either:
• the amount, excluding tax charged for the supply, the VAT component, and the total amount payable for the supply; or
• a statement that VAT is included in the final price if VAT has been included.
Section 2(2) of the VAT Act requires that all monetary amounts be expressed in terms of Vanuatu currency (vatu).
The Director has not prescribed any specific format for tax invoices, only that the above information is recorded. This means that any document that contains the required information will constitute a tax invoice.
Please take note that our Auditors and Compliance Officers have been instructed to disallow VAT claims where proper tax invoices are not held in the return periods in which the input tax are claimed, for supplies over VT5,000.
A tax invoice is not needed for supplies of VT5,000 or less (including VAT). However registered persons are still required to keep a record (such as invoices, vouchers or receipts) for the purchases i.e. documentary evidence is still required to support a claim for a VAT credit on small purchases incurred in deriving the taxable income of the business. It is acceptable in practice for claims for tax invoices if issued by a VAT registered supplier for any monetary amounts less than VT5,000 for any business purchases.
>> This Weekly Column is an initiative by the Department of Customs and Inland Revenue (DCIR) to provide awareness to its clients and the public at large to promote voluntary compliance, while at the same time, achieve certainty and avoid misunderstandings and disappointments. This approach will also ensure that DCIR achieves its objectives of collecting over 83% of the total budgeted 2012 Government revenue, protecting our borders and facilitating legitimate trade.