Navigating value-added tax (VAT) incurred by Gauteng’s e-tolls can be quite challenging, says many a business owner trying to claim back their input cost.
Some of the concerns include the issue of copy invoices instead of original, the fact that the client’s details are not on the invoice and that invoices are issued for higher amounts and do not reflect the discounts, should a road user make use of them.
Electronic Toll Collection (ETC), the company that has been contracted by the South African National Roads Agency (Sanral) to run the e-toll system, confirmed that a tax invoice must in terms of the VAT Act contain the VAT number of the recipient of any taxable supply in excess of R5 000.
“In the case of ORT, a taxable supply occurs when a passage is recorded at a gantry. Applying the VAT law Sanral should issue a tax invoice for each supply, meaning that each gantry passage should have its own invoice.
The value of each supply will always be less than R5 000. This alleviates Sanral from the requirement of producing a tax invoice with the VAT number of the receiver of the supply.”
The South African Revenue Services (Sars) did not reply to questions in this regard.
Sars issued a ruling in September 2011 to alleviate the burden on Sanral to issue an invoice for each transaction, which would have amounted to millions of invoices per day, ETC said.
- Only the name of the plaza will suffice as Sanral’s address on the tax invoices issued by toll plazas and the full address will not be required;
- Sanral will be allowed not to issue tax invoices for each supply as there are sufficient records available to establish the particulars of the transactions;
- When making available the tax invoice on a secure website, it is acceptable to Sars as electronic invoicing;
- Sanral will be allowed to retain its invoices electronically; and
- Sanral can account for the VAT when the actual supply takes place.
Sars further ruled that Sanral must issue a consolidated tax invoice for a period not exceeding a calendar month.
This consolidated tax invoice is marked “copy invoice”, since Sanral does not issue any invoices at the time of supply.
Piet Nel, tax expert at the South African Institute of Chartered Accountants (Saica), says the copy tax invoice should be accepted by Sars, but he is concerned that the consolidated invoice for fleet owners may exceed the R5 000 limit, in which case VAT number of the recipient of the taxable supply has to be on the invoice, “unless their ruling allows for an exception”.
He says service providers can make provision for discounts, for example to encourage payment within a specified period of time, in two ways. If the terms of the discount are clearly stated on the front of the invoice, the client can merely pay the lesser amount and tender the tax invoice containing these details to Sars. In the case of Sanral, the details of the discount are not on the invoice.
The alternative is that the client pays the lesser amount and requests a credit note from Sanral which he submits to Sars. Sanral will by law have to supply the credit note within 21 days. If it fails to do so, it will be in contravention of the VAT Act. If the client retains the letter in which they requested the credit note, they should not be penalised. Should the road user pay the lesser amount but claim the higher amount of VAT stated on the tax invoice, he would be over-claiming and that amount to an undue tax benefit, Nel said.
John Clarke, spokesperson for the Opposition to Urban tolling Alliance (Outa) has called on Sanral to clarify the issue around VAT credit notes. If Sanral does not issue the credit notes, which may amount to thousands of documents, it will have to pay VAT to Sars on the higher amount, while collecting the lower amount of VAT on the discounted amount. This may lead to serious overpayment on the side of Sanral, which will have to come from the road users’ pockets, he said.
“Outa is going to issue a report that will be sent to the Minister of Transport and the Parliamentary portfolio committee for transport in which these kinds of complexities will be highlighted that have not been thought through properly. The system is too complex. We need a simple system which makes it easy for people to pay,” Clarke said.