Tax Invoice and Regular Invoice

In the business world we sometimes get in dilemma of how to carry out invoicing to the buyer. It is sometimes confusing to determine whether to issue tax invoice or just regular invoice. Let’s us look into these in the broader way.

What is a Tax Invoice?

A tax invoice is an invoice issued by a registered company / person to the registered buyer or purchaser for goods and services. So, what is registered person, these means company registered with Kenya Revenue Authority and has obtained a tax identification number called Personal Identification number as PIN?

What is a Standard or Standard invoice?

A standard invoice is issued by resisted company /person to the non-registered buyer or purchaser for goods or services. Sometimes, even the seller cannot be registered with the Kenya Revenue Authorities. Therefore either one or none has the tax identification number i.e. PIN number. What contains in Tax Invoice.

What does a Tax Invoice contain?

The following details are usually seen in the Tax Invoice:-

1. Invoice number
2. Date of issues
3. Name and Address of the seller
4. Name and address of the buyer
5. Tax identification number (PIN)
6. Description of goods or service
7. Quantity and unit price
8. Total amount
9. Discount (if any)
10. Tax charges
11. Signature and authority seller

Attached to it is the “Electronic generated receipt” which shows details of all amount and tax amount. Below is the text sample for Tax Invoice.

An Electronic Invoice will contain following details;

1. PIN of the user of a register
2. Time and date of the tax invoice;
3. Tax invoice serial number
4. Buyer’s PIN (Optional)
5. Invoice Type (Original/Duplicate);
6. Invoice Category (Tax Invoice, Credit Note, Debit Note)
7. Payment Mode (Cash, Debit Card, Credit Card, Pre-paid Card, Mobile Money, EFT, RTGS, Credit Note)
8. Tax invoice total gross amount
9. Tax invoice total tax amount
10. Tax invoice total net amount
11. Barcode of the goods ( For Exempt and Zero rated);
12. Brief description of goods or services
13. Quantity
14. Unit of measure;
15. Tax Rate charged;
16. Unique register identifier
17. Digital Signature

What does a standard invoice contain?

1. Invoice number
2. Date of issues
3. Name and Address of the seller
4. Name and Address of the buyer
5. Description of goods or service
6. Quantity and unit price
7. Total amount
8. Signature and authority seller

Difference between Tax Invoice and Standard Invoice

1. A tax invoice implies that the invoice prepared and issued by the registered company/dealer to the purchaser to show the tax due on specific sale; whereas the standard invoice is prepared and issued by the company/individual to the purchaser showing the amount payable.
2. Tax invoice is capable of availing input tax credit (credit on inputs i.e. Tax already paid at the time of purchase). As opposed to the Standard Invoice whose request for payment does not include information on goods and server tax.
3. Tax invoice include PIN number for both seller and purchaser. But the standard invoice contains PIN number for seller only.

Similarities in the Tax Invoice and the Standard Invoice

• Both are non negotiable instruments
• Both show amount payable
• Description of the buyer and the seller