what is a tax invoice

A tax invoice is a document issued by a seller to a buyer detailing the goods or services sold, the amount charged for them, details of the two parties, and the applicable taxes. It serves as evidence of the transaction and is used for accounting and taxation purposes. Tax invoices are essential for compliance, accounting, and business operations, and they are used to calculate and report the tax owed or payable by the buyer and seller. They are also crucial for VAT/GST systems, where tax is charged on the value added at each stage of production or distribution. Tax invoices are necessary for purposes such as supporting a registered person’s claim for the deduction of input tax incurred on standard rated purchases and determining the supplies that should be included in the taxable period. The specific requirements for tax invoices may vary depending on the country or region, so businesses must be aware of the invoicing and tax regulations in their respective areas.