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[FAQ] VAT invoice requirements for online sales commission
- 04 December 2020
- VAT
- Christo Theron
Background
A customer purchases an item from a retailer via a certain platform (e.g. R100). The platform service provider charges the retailer a commission per transaction of (e.g. R2). The platform service provider net settles the retailer R98. The net settlement to the retailer is done daily.
Can the platform service provider issue a cumulative tax invoice to the retailer once a month for all the commission earned in that period or does a tax invoice become due 21 days from each net settlement date?
Answer
The VAT Act
Section 20(1) of the VAT Act requires that a registered VAT vendor, who made a taxable supply of goods or services to a person, must issue the recipient of the supply with a tax invoice within 21 days from the date of the supply.
Section 9(1) of the VAT Act determines that a supply is deemed to be made at the earlier of the issuing of any invoice or the receipt of any consideration in relation to a supply (in the case of a VAT vendor registered on the invoice basis).
Section 20(7) of the VAT Act determines that where the Commissioner for SARS is satisfied that there are or will be sufficient records available to establish the particulars of any supply or category of supply, and it would be impractical to require that a full tax invoice be issued in terms of section 20 of the VAT Act, the Commissioner for SARS may, subject to such conditions as the Commissioner may consider necessary, direct that any one of the particulars specified in section 20(4) (full tax invoices) or 20(5) (abridged tax invoice) of the VAT Act may not be contained in a tax invoice, that a tax invoice is not required to be issued or that the particulars specified in section 20(4) and 20(5) of the VAT Act be furnished in any other manner.
Application of the principles
Debt set-off represents a legal form of payment. Technically speaking the time of supply would therefore take place each time a net-payment is made.
In practice it would however be very challenging to apply as well as being completely counter-productive.
We recommend that you apply to SARS to issue alternative tax invoices as envisaged in section 20(7) of the VAT Act. SARS could approve the set-off sheet as an alternative to issuing tax invoices or approve a single tax invoice at the end of each tax period.
Webinar Commentary
Further webinar commentary on VAT invoice requirements can be accessed here.