TAX MATTERS: Requirements for VAT input tax claim
Documentation is central to the claiming of Value Added Tax (VAT) input tax. It constitutes the basis of claiming input tax to avoid proliferation of fictitious input tax claims. The most important of all documents is the fiscal tax invoice, as of the 1st of January 2022.
This forms the basis of a VAT input tax claim. Subsidiary documents are debit and credit notes and these are required to deal with reversals of the original transaction.
All these documents produce an audit trail and make the VAT credit method self-policing. The VAT legislation states that input tax can only be claimed where proper fiscal tax invoices or bills of entry are held by the operator making the claim.
A fiscal tax invoice is therefore, an important part of the VAT system.
It is a legal document that allows an operator to recover input tax and should meet requirements of the VAT laws.
It is defined as a document provided by a registered operator in terms of the VAT Act.
It is different from an ordinary invoice, which is simply a document notifying the purchaser of an obligation to make payment in respect of a transaction.
Notwithstanding the fact that an invoice can be used for purposes of raising output, only a fiscal tax invoice can be used for purposes of claiming input tax.
A registered operator is required in terms of the VAT laws to issue a valid fiscal tax invoice to a recipient of goods or services within 30 days from the date of supply of such goods or services.
The VAT general regulations further provide that “in addition to the requirements of the VAT laws, a registered operator shall issue a tax invoice in case of goods supplied to a registered operator every time a transaction takes place and to any other recipient at the request of the recipient”.
Where the consideration in money for a supply is ZWL$1 300/US$10 or less, a fiscal tax invoice is not required. Documents such as a till slip or sales docket can therefore, be used under such circumstance.
It is an offence to issue more than one fiscal tax invoice for a particular taxable supply and where the original fiscal tax invoice is lost or misplaced this can be replaced by a copy of a fiscal tax invoice which should be clearly marked “copy”.
For a taxpayer to claim input tax he or she should be holding a valid fiscal tax invoice. A valid fiscal tax invoice is a document that contains the words “fiscal tax invoice” in a prominent place, the name, address and vat registration number of the supplier, the name and address of the recipient and if recipient is a registered operator, the VAT registration number of the recipient, an individual serialised number and the date upon which the tax invoice is issued, a description of the goods or services supplied, the quantity or volume of the goods or services supplied, price and vat charged.
All the features must be present to constitute a valid tax invoice and if any of the features is missing input tax claim will be disallowed.
For example, if a supplier has given the recipient an invoice, which unfortunately has a quoted wrong VAT number of the recipient, that invoice is an invalid tax invoice. Operators should ensure that every tax invoice received that is in excess of ZWL$1 300 satisfies the requirements of a tax invoice.
The commissioner can, however, use his discretion in accepting a non-compliant fiscal tax invoice.
The input tax should be claimed within the period the registered operator is required to furnish a return to Zimra or 12 months, whichever is the longer period.
The document should be held by the registered operator making that deduction at the time that any return in respect of that supply is furnished.
The commissioner could extend this period if the registered operator can justify the reason for the delay. In other words, the commissioner can permit a registered operator to claim input tax on fiscal tax invoices that are more than 12 months old.
This is with effect from January 1, 2019. This law reads as follows: “Provided that the registered operator can show good cause to the commissioner for extending the time for claiming a deduction of amount of input tax, the commissioner may allow such a claim from the time a registered operator was required to make a return.”
It provides the commissioner the discretion to allow input tax to be claimed on a fiscal tax invoice which is older than 12 months.
A registered operator must, however, defend his or her position for making a late claim of the input tax, and if the commissioner is convinced that the reasons behind the delay are valid according to his or her own discretion, then the operator can be permitted to claim the input tax even after the 12 months have lapsed.
The main reasons why a claim for input tax might not be made in the period during which the supply is received could be because of mere oversight or because the fiscal tax invoice was received late.
In conclusion, it is important for taxpayers to note that even if the VAT laws were amended by scrapping the words “tax invoice” and replacing them with “fiscal tax invoice”, all other features of a tax invoice and requirements are still important for the purpose of claiming VAT input tax.
Meanwhile, Matrix Tax School invites you to take part in the upcoming course: VAT Concept Theory and Practise.
The course runs from March 1 to May 31, 2022 through the Zoom portal.
Tapera is the founder of Tax Matrix (Pvt) Ltd and the CEO of Matrix Tax School. He writes in his personal capacity.