VAT Invoices: VAT Can Only Be Charged on Taxable Supplies

What Has Changed?

The Finance Act, 2026 amended Section 42(2) of the VAT Act to clarify when an invoice may show an amount that purports to be tax.

What Does This Mean?

VAT should only be shown or charged on an invoice where the underlying supply is a taxable supply for VAT purposes.

Businesses should therefore confirm the VAT treatment of their goods and services before charging VAT on an invoice.

What Businesses Should Check

• Whether the goods or services supplied are taxable for VAT purposes.
• Whether the transaction is zero-rated, exempt or outside the scope of VAT.
• Whether the invoice accurately reflects the VAT treatment of the underlying supply.
• Whether accounting and invoicing systems apply the correct tax code.