How to claim VAT back, and what makes a valid tax invoice

What "claiming VAT back" actually means

South Africa runs a value-added tax (the standard rate is 15% at the time of writing). When a VAT-registered business sells something, it charges output VAT and pays it to SARS. When it buys something for the business, it pays input VAT. On your VAT return you offset the two: you hand over the output VAT you collected, minus the input VAT you paid. If your input VAT is higher, SARS refunds the difference.

So "claiming VAT back" simply means making sure every bit of input VAT you've legitimately paid is captured on your return. Miss a receipt and you don't lose a deduction — you literally pay SARS more than you needed to.

Who can claim?

Only a registered VAT vendor can claim input VAT. You must register once your taxable supplies (turnover) exceed R2.3 million in any consecutive 12-month period. You may register voluntarily once you're over R120,000. If you're not registered, you can't claim input VAT — though the full, VAT-inclusive cost may still count as an income-tax deduction (see our expense-tracking guide).

The receipt rules: R5,000 and R50

SARS won't accept just any slip for a VAT claim. What you need depends on the value of the purchase:

What a full tax invoice must show

For purchases over R5,000, section 20(4) of the VAT Act sets out what the document must contain:

• The words "tax invoice", "VAT invoice" or "invoice";
• The supplier's name, address and VAT registration number;
• The customer's name and address;
• A serial number and the date of issue;
• A description of the goods or services, and the quantity;
• The value, the VAT charged and the total — or the total with a statement that VAT is included at the standard rate.

An abridged invoice (for R5,000 or less, under section 20(5)) drops the customer's details and some line detail, but still needs the supplier's VAT number and the VAT amount or inclusive statement. Miss any one of the required fields and, strictly, the document doesn't qualify as a tax invoice at all — regardless of how obviously legitimate the purchase was.

Other ways an invoice can fail

One thing that trips people up: the R5,000 line applies per supply, not per supplier or per month. The same supplier might issue you a full tax invoice for a R12,000 order this week and a valid abridged one for a R400 top-up next week. Don't assume a supplier is "an abridged-invoice supplier" or "a full-invoice supplier" — check each document against the value of that transaction.

The missing VAT number gets most of the attention, but a handful of smaller defects show up often enough to be worth a quick scan:

• No date, or an illegible one. A tax invoice without a clear date of issue doesn't meet the requirement, even if everything else is present.
• A description too vague to mean anything. "Goods" or "services rendered" on its own doesn't describe what was actually supplied. It doesn't need to be an essay, but it needs to say what was bought.
• VAT shown at the wrong rate, or not shown at all. If neither the VAT amount nor an inclusive statement appears anywhere on the document, there's nothing to tie the claim to.
• A quote or a pro forma invoice mistaken for a tax invoice. Neither is a tax invoice, however complete they look — a genuine tax invoice is issued once the supply has actually happened.

What doesn't invalidate an invoice is its format. An emailed PDF, a WhatsApp-forwarded receipt or a photo of a till slip is all acceptable, provided the document itself carries the required fields and you keep it for the standard five-year retention period. It's the content that counts, not the paper.

What to do when a supplier leaves something out

It happens constantly, especially with smaller or informal suppliers who don't run proper invoicing software. A few practical steps, in order:

• Go back to the supplier first. Ask them to reissue the invoice with the missing field, or to send a corrected version by email. Most will do it without fuss — it costs them nothing, and a VAT-registered supplier is required to issue a valid tax invoice on request anyway.
• Confirm the VAT number independently if you're not sure it's genuine. SARS's VAT vendor search on eFiling shows whether a VAT number is currently registered and active.
• If the supplier won't or can't fix it, don't claim the input VAT on that document. Claiming against a defective invoice and getting caught on audit costs more than the VAT itself — SARS can disallow the claim and add penalties and interest on top.
• Keep the correspondence. If you had to chase a correction, keep the email trail with the corrected invoice. It's useful if the same question comes up on audit.

The one thing you can't do is quietly "complete" a supplier's invoice yourself — adding their VAT number from memory, for instance. The document has to come from the supplier as issued; you're entitled to check it, not to author it.

Expenses you can't claim VAT on

Some input VAT is "blocked" regardless of how good your invoice is. The main ones:

• Entertainment — meals, drinks and hospitality (with limited exceptions).
• Motor cars — VAT on most passenger vehicles can't be claimed (commercial vehicles like bakkies are treated differently).
• Club subscriptions — memberships of sporting or recreational clubs.

And, obviously, you can't claim VAT that was never charged — a purchase from a supplier who isn't VAT-registered carries no VAT to reclaim.

Keep your claimable VAT visible all year

The businesses that claim the most back are the ones that don't wait for the VAT period to end. If every receipt is captured and its VAT split out as you go, your claimable total is always ready — and you're never scrambling to find a six-week-old slip the night before a return is due.

This guide is general information, not tax advice. VAT rules, rates and thresholds change — confirm the current position with SARS or a registered tax practitioner before submitting a return.