Third Party Invoicing

          The golden rule when third party invoicing is involved in international trade consignments is to “use the last invoice”.  Third party invoicing refers to invoices issued by a third party, i.e. a buying or selling agent.

          But why is it important and what are the implications of not taking the most recent invoice into account?

          It has to do with commissions.  Commissions according to the SARS policy on Valuations (SC-CR-A-03 dated 24 January 2014) is when an intermediary acts on behalf of either the supplier of the goods (selling commission) or the importer of the goods (buying commission). Third party invoicing may also include other costs, charges and expenses as a condition of the sale.

Commissions and other expenses influence the Customs value of goods imported and hence, the amount of duty and Vat payable to SARS.

          The last invoice issued in the trade transaction would (or should), in addition to the original price paid or payable, include all commissions, costs, charges and expenses on the invoice. This does not mean that such commissions must always be included when calculating the Customs value for duty purposes. Buying Commissions are often accepted by Customs (and hence deductible) provided these are “bona fide” buying commissions. 

          Occasionally when multiple invoices are involved, confusion may exist over which invoice should be used for Customs clearance purposes.

A personal piece of advice is to obtain copies of all invoices involved in the transaction. Analyse the value of each and explore the invoice with the highest value. If Commissions or other expenses are reflected on a separate invoice altogether, then these too must be considered for inclusion. 

Amended Invoices for Customs Purposes

          This seemingly boring subject contains a few cautioning aspects worth noting.

          Customs requires any change to invoice particulars (especially a change in the transaction value) to be accompanied by an amended invoice. Reasons for amended invoices may include for example:

a.       Amounts debited or credited.

b.      Any amount refunded.

c.       Any additional amounts paid or payable whether in money or in kind.

d.      Any information to be corrected.

e.       If SARS Customs request the invoice to be amended.

f.       If the invoice needs to be split for any reason.

An invoice replacing a previous invoice may only replace one invoice, not multiple invoices. Supplementary invoices may also be produced.

          Amended invoices must contain a statement setting out the reasons for the amendment. It should, where applicable, also be accompanied by documentary evidence of such amendment.

          Customs may refuse to accept an amended invoice if they believe that the amendment is not a true reflection of the change.

          You should be cautioned about Customs requesting an invoice to be amended (point e). Any such request should be based on an investigation of sorts. The outcome of such an investigation must be in writing. It may even be in the form of a Determination issued. If you are not satisfied with a decision made by Customs you should follow the dispute resolution process discussed in previous blogs.

          An amended invoice must be communicated to Customs by means of passing a VOC (Voucher of Correction). This is relevant if the amendment results into any change on the Customs clearance declaration.

          Another area of caution is that any VOC passed for an amended invoice must be done within one month of “receipt” of the amended invoice. While the emphasis is placed on the time of “receipt”, the date when the amended invoice was issued is important.

          One should realistically have received the amended invoice soon after its issue. Taking longer than one month may result in interest being demanded from SARS, i.e. for additional duties and taxes on debit notes.