E-invoicing readiness

Value-added tax (VAT) is a self-assessment tax, and documentation serves as the foundation for verifying the accuracy of the applied VAT treatment. Some of us may still recall receiving tax invoices via fax or submitting hardcopy returns at a South African Revenue Service (SARS) branch, carefully filing the stamped copy as proof of submission. Times have changed drastically since then and an even bigger change is on the horizon in the form of e-invoicing. The changes that will be implemented will be the most significant since the inception of VAT in 1991.

In 2023, SARS released a “Discussion Paper on VAT Modernisation”, which addresses e-invoicing and real time reporting in pursuit of its strategic objective of modernising its systems to provide a digital solution for taxpayers to comply with their obligations. With the reversal of the VAT rate increase this year, these efforts are aimed at increased tax collections thereby closing the tax gap.

Over 60 countries globally have already introduced and implemented some form of e-invoicing and/or electronic reporting. Some countries have taken a phased approach, mandating only electronic invoicing (e-invoicing) and reporting for certain transactions while others have already had a change in direction and adjusted their approach after initial implementation.

As e-invoicing gains recognition as a global phenomenon, what does this mean for South Africa?