Tax invoice vs pro forma invoice: when to use each in SA

The tax invoice vs pro forma invoice difference is simple: a tax invoice is the legal VAT document that records a supply and lets a VAT-registered customer claim input tax, while a pro forma invoice is a preliminary document showing what an invoice will look like, usually used to request payment upfront or to get internal approval. A pro forma is not a tax invoice, does not create a VAT liability on its own, and cannot be used to claim input VAT.

Mixing the two up causes real problems: customers who try to claim VAT on a pro forma can have claims disallowed, and suppliers who never follow up with a proper tax invoice leave their records incomplete.

What a tax invoice is

In South Africa, a tax invoice is defined by section 20 of the VAT Act. Only a registered VAT vendor may issue one. It must be issued within 21 days of the supply and, for supplies over R5,000, contain the full set of details including the recipient's name, address and VAT number. For the full checklist, see our guide to VAT invoice requirements in South Africa and the SARS tax invoices page.

Key features:

• Headed "Tax Invoice", "VAT Invoice" or "Invoice".
• Has a unique serial number from your normal invoice sequence.
• Records an actual supply, so it goes into your sales ledger and VAT return.
• Supports the customer's input tax claim.

What a pro forma invoice is

A pro forma invoice is a good-faith preview. It sets out the goods or services, quantities, prices, VAT and payment terms you intend to invoice, but no supply has been recorded yet.

Common uses:

• Requesting payment before delivery, for example a deposit on custom work or full prepayment from a new customer.
• Internal approval at the buyer's side. Many procurement departments need a document to raise a purchase order or payment request.
• Import and export paperwork, where a pro forma describes a shipment before the commercial invoice is final.
• Price confirmation when a quote needs to look like the final invoice.

Because it is not a tax invoice, a pro forma should be clearly marked "Pro forma invoice" (never "Tax Invoice") and should use a separate numbering series, such as PF-0001, so it can never be confused with your tax invoice sequence.

Tax invoice vs pro forma invoice side by side

What happens when a pro forma is paid

This is where most mistakes happen. Under the VAT Act's general time-of-supply rule, a supply is generally treated as taking place at the earlier of when an invoice is issued or when any payment is received. A pro forma is not an invoice for this purpose, but receiving payment against it usually is a trigger.

In practice that means:

1. Customer pays the pro forma (in part or in full).
2. You account for VAT on the amount received in that VAT period.
3. You issue a proper tax invoice for the amount, within 21 days.

Some special rules apply to certain types of supplies, so ask your tax practitioner if your situation is unusual.

Worked example: deposit on a custom order

A clearly illustrative example for a VAT-registered joinery business quoting a kitchen at R92,000.00 including VAT:

The pro forma never enters the VAT return. The two tax invoices do, each in the period the payment or invoice occurred. Some businesses prefer to invoice the full amount upfront and treat the deposit as part payment; both approaches work if your records and VAT treatment match.

Pro forma vs quote vs tax invoice

• Quote: an offer. The customer can accept or decline.
• Pro forma: an accepted or near-final quote laid out as an invoice, usually to request money or approval.
• Tax invoice: the final, compliant document for a supply.

Businesses that are not VAT registered issue ordinary invoices rather than tax invoices, but the pro forma idea still applies to them.

Good practice checklist

• Label pro formas clearly and keep them out of your tax invoice numbering. Our invoice numbering guide explains how.
• Add a line such as "This is not a tax invoice. A tax invoice will be issued on payment."
• Set an expiry date on pro formas so old prices are not paid months later.
• When payment arrives, issue the tax invoice immediately and reference the pro forma number.
• If the deal changes after a tax invoice is issued, use a credit note, not a new pro forma. See credit note vs refund.

How CentraPoint helps

In CentraPoint you can send an invoice with a pay-by-link option through your chosen gateway, or record an EFT or cash payment when a customer pays offline. EFT orders capture proof of payment for your team to confirm before the order is treated as paid. Invoices use your VAT settings (tax-inclusive or exclusive) and are generated as branded PDFs, with receipts and refund notes produced from the same records. See the invoices documentation for details.

Frequently asked questions

Can I claim VAT on a pro forma invoice?

No. Input tax must be supported by a valid tax invoice. Ask the supplier for a tax invoice once you have paid.

Is a pro forma invoice legally binding?

A pro forma is not a VAT document, but it can form part of the agreement if the customer accepts it. Treat the prices and terms on it as an offer you are willing to honour.

Does a pro forma invoice need a VAT number?

It is sensible to show your VAT number and VAT amounts so the customer knows the final price, but it must be clearly marked as a pro forma and not as a tax invoice.

Should pro formas use the same numbering as tax invoices?

No. Use a separate series, such as PF-0001, so tax invoice numbers stay unique and continuous.