Tax and SARS knowledge base
When may a customer create a VAT invoice for a supplier?
When may a customer create a VAT invoice on behalf of a supplier?
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Direct answer
A customer may create a tax invoice on behalf of a supplier only in a permitted recipient-created tax-invoice arrangement. BGR 15 provides the Commissioner's approval where the recipient determines consideration and controls the quantity or quality of the supply, or measures or tests goods sold. It is not a general right to make an invoice whenever a customer has better purchase-order or payment data.
The arrangement does not make the customer the supplier for VAT purposes. The supplier remains responsible for the VAT treatment of its supply. Before a platform, procurement business or corporate customer starts self-billing, it should identify the supplier, the actual supply, the parties' VAT status and the reason the recipient will create the document.
What this means in practice
Recipient-created invoicing is commonly considered where a buyer determines an amount only after receiving goods, measuring output, calculating a commission or applying a contract formula. It can improve administration, but it creates a control risk if the parties merely replace supplier invoices with buyer-generated documents without checking the VAT requirements.
Start with the commercial agreement. It should specify the goods or services, pricing method, tax treatment, invoice sequence, correction process, information each party must provide and who can approve changes. BGR 15 and SARS Interpretation Note 56 require an agreement between the supplier and recipient. It should record permission for the recipient to issue the documents and the parties' acknowledgement that the supplies meet the BGR requirements. An informal email chain may not adequately explain the arrangement during a VAT review.
The document itself still has to carry the appropriate tax-invoice information. Match supplier and recipient details, VAT registration numbers, date, unique reference, description, consideration and VAT treatment to the current VAT404 requirements. A purchase order, remittance advice or platform statement is not automatically a valid tax invoice simply because it shows an amount and VAT.
Both parties should reconcile the document to the underlying supply. A supplier must be able to match the invoice to its contract, delivery record, service confirmation and ledger. The recipient must be able to match it to its purchase record, approval and VAT201 working paper. This dual reconciliation is important when amounts are later disputed, adjusted or paid in a different tax period.
Step-by-step
- Identify the supply and parties.
Confirm the legal supplier, recipient and any intermediary. Check whether each entity is registered as a VAT vendor and whether the supply is taxable, exempt, zero-rated or outside the VAT scope. Do not assume a group relationship or common director makes the arrangement valid.
- Confirm the reason for recipient creation.
Document why the recipient determines consideration and controls quantity or quality, or is responsible for measuring or testing the goods. Link that reason to the contract and actual operational process. If these BGR 15 conditions are not met, do not issue recipient-created documents unless written SARS authorisation has first been obtained under the applicable VAT provisions.
- Put the arrangement in writing.
Record the parties, supplies, calculation method, invoice timing, document format, numbering, corrections, disputes and responsibilities. Have an authorised person from each party approve the arrangement. Review it when the contract, VAT status, pricing formula or systems change.
- Produce compliant documents.
Build fields and validations into the billing system so the document contains the required details. Prevent duplicate invoice numbers, incorrect VAT numbers and unsupported manual tax overrides. Keep the source data that explains quantity, rate, deductions and final consideration.
- Control corrections.
When a supply is cancelled, returned, discounted or recalculated, follow the proper credit-note or debit-note process. Do not silently amend a prior document after it has been included in a VAT return. Retain the original, correction reason and linkage between documents.
- Reconcile and retain.
Reconcile recipient-created documents monthly to supplier statements, general ledger, payment records and VAT201 returns. Investigate gaps promptly. Retain the written arrangement and source records with the tax-invoice archive.
Documents and records to keep
Keep the signed arrangement, supplier VAT details, tax invoices, pricing schedules, purchase orders, delivery or service evidence, acceptance records, credit and debit notes, payment records, VAT201 calculations, reconciliations and correspondence about changes or disputes.
Important limits and exceptions
This guide does not say that every buyer may self-bill every supplier. The BGR 15 conditions and written supplier-recipient agreement matter. If those BGR conditions cannot be met, the parties need written SARS authorisation before recipient-created tax invoices, credit notes or debit notes are issued. It also does not decide whether an input-tax deduction is available, whether a supply is taxable or whether a platform acts as principal or agent. Those questions depend on the actual contracts and transaction facts.
When to get tailored advice
Get VAT advice before implementing self-billing for high-value supplies, related parties, cross-border transactions, agency models, commission arrangements or suppliers with changing VAT status. TaxProof can help create an evidence checklist and reconciliation format. We cannot approve an arrangement for SARS or confirm a particular input-tax claim.