Refund of VAT – features of a valid tax invoice in relation to VAT input tax claims.
Value Added Tax (VAT) is invoice-based and is accounted for on both cash and credit transactions. The VAT payable is the difference between output tax and input tax. Output tax is the tax charged on taxable supplies made while input tax is the tax incurred by the registered operator on the acquisition of taxable supplies of goods and services.
Who may charge VAT and claim for input tax?
Only registered operators are required to charge VAT and are entitled to claim input tax on purchases of goods and services which are for use in making taxable supplies. In order to claim the input tax, a registered operator must be in possession of a valid „tax invoice‟ or „fiscal tax invoice‟.
Fiscal/Tax invoice
Any supplier – who is a registered operator – who supplies taxable goods or services is required to issue the recipient with a tax invoice or fiscal tax invoice within 30 days from the date of such supply. It is unlawful to issue more than one tax invoice for each taxable supply. If a recipient loses the original tax invoice, the supplier may provide a copy clearly marked “copy”.
Why input tax may be disallowed
In some cases clients claim input tax using invoices which do not contain all the necessary features of a tax invoice or a fiscal tax invoice. This results in such invoices being disallowed for input tax purposes. It is, therefore, vital that our valued clients should check and ensure that the invoices being issued by their suppliers contain all the salient features as listed below.
Features of a valid tax invoice or fiscal tax invoice
- The words „Tax Invoice‟ or „Fiscal Tax Invoice‟ should be 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
- Serialised number and the date on which the invoice is issued
- Description of the goods or services supplied
- Quantity or volume of the goods or services supplied
- Value of supply, price charged or consideration of the supply
- A fiscal tax invoice should also include any other words or phrases employed under the fiscal recording regulations denoting an invoice used to account for taxable supplies
Statutory requirement to maintain records
It should be stated that invoice records and any other business records should be kept for a minimum period of six years and the Commissioner General of ZIMRA may request such records for any verifications as provided under the VAT Act.
Requirement to carefully check VAT returns
Clients are expected to carefully check their VAT returns and input tax claims to ensure that valid tax invoices or fiscal tax invoices contain all the salient features to avoid unnecessary disallowances of input tax claims and incurring of penalties and interest chargeable in respect of claims for undue refunds. This will also enable them to make successful input tax claims and facilitate the efficiency in processing VAT refunds.
Offences
It is an offence for an unregistered operator to charge VAT in respect of any supplies made.Anyone involved in such unlawful activity will be prosecuted for such an offence. In the event that clients suspect dealing with a suspicious supplier, they are free to contact the Police or their nearest ZIMRA offices for verification or to report such malpractices.
