vat modernisation
South Africa

The process of digitally exchanging documents with a strictly structured or machine-readable data format (e.g. XML or JSON). This in turn, enables such documents to be automatically processed by the recipient’s systems without any manual intervention.

In simple terms, with e-invoicing, businesses will be transmitting data instead of (or in addition to) static, PDF documents, and this data will be structured in a standardised format, meaning each party can process incoming invoices (and credit notes) automatically.

The process of transmitting a subset of each e-invoice’s VAT-relevant information to the tax authority (e.g. SARS) for near, real-time reporting purposes.

A shared set of rules on how e-invoices are formatted and exchanged. These rules allow businesses with different accounting or ERP systems to send, receive and automatically process each other’s e-invoices without manual intervention.

Robust interoperability standards are therefore essential for implementing a successful e-invoicing and e-reporting framework.

Software that enables a business to send out their documents in a user’s desired e-invoice format, usually via an e-invoicing platform or portal. Ideally, this software integrates directly with a business’s existing ERP or accounting system, allowing for automatic generation of e-invoices as soon as they are raised in the ERP, while simultaneously removing the risk or cost of any system changeover.

An e-invoicing and e-reporting framework consisting of 5 key elements (or “corners”): The supplier (Corner 1), the supplier’s access point (Corner 2), the buyer’s access point (Corner 3), the buyer (Corner 4) and SARS’s access point (Corner 5).

Under the 5 corner framework, suppliers and buyers (C1 and C4) send and receive e-invoices via their respective access points (C2 and C3).

Simultaneously, for each e-invoice exchanged, the supplier’s and buyer’s access points report each e-invoice’s underlying VAT information to SARS’s access point (C5).

Software that enables businesses to generate, validate and transmit e-invoices in the required format, via the required e-invoicing transmission protocol, with details of these requirements still to be determined by SARS. Similarly, an access point must also be able to receive, validate and process e-invoices sent from other access points, thereby demonstrating interoperability with other access points in the network.

To support near real-time, e-invoicing and e-reporting, a business’s chosen access point should be able to integrate directly with the business’s existing invoicing, ERP or accounting system, allowing for automated data flows, enhanced accuracy and reduced risk of failed validations.

To avoid costly implementations and systems changeovers, businesses should opt for an access point solution that supports their existing ERP package.

Under SARS's proposed 5 corner model, the supplier's and buyer's access points act as corner 2 and corner 3, respectively.

The process of transmitting all vendor transaction data that impacts the final VAT calculation in real time. While SARS has not specifically defined the exact fields and level of granularity that would need to be transmitted under real-time VAT reporting, many overseas tax authorities have implemented their own real-time reporting requirements where specified document data underlying each individual transaction needs to be transmitted soon after the transaction occurs.

Such requirements are often referred to overseas as Continuous Transaction Controls (CTC).

An international network, adopted by many countries overseas, over which companies are able to exchange e-invoices. While PEPPOL is not an e-invoicing software, it is a network through which many e-invoicing software connect to via a PEPPOL Access Point.