General Inquiry Regarding Zero-Rate Tax Invoices and Local L/C (Purchase Confirmation) for KRW Domestic Transactions
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I am planning to manufacture equipment for export, but all contracts and monetary transactions are being conducted in KRW with a domestic intermediary. The intermediary has requested a zero-rate tax invoice, so I have the following inquiries:
1. Is it possible to issue a zero-rate tax invoice even though the equipment payment transaction is conducted in KRW?
2. The intermediary stated that they need to input tax invoice information to issue a Purchase Confirmation (Local L/C). I missed the deadline to apply by the 10th of the following month to proceed without registering a tax invoice. In this case, what should I enter in the tax invoice field, or is it possible to issue the Purchase Confirmation first and then register the tax invoice later?
3. I heard that a contract is required as one of the supporting documents when applying for a Purchase Confirmation, but I substituted the contract with a Purchase Order (PO). Can I submit a PO as a supporting document, and is it acceptable if the amount is written in KRW?
4. I would like to know if the Purchase Confirmation can be issued both before and after shipment.
5. When using the export permit as a supporting document, can I issue a tax invoice for the full amount of the equipment even if there is an outstanding balance, or can it only be issued after the full payment has been made?
Answer 1
- 01. Even when domestic transactions are conducted in Korean Won, it is possible to issue zero-rated tax invoices. 2, 4. Local LCs (Purchase Confirmations) are divided into pre-issuance and post-issuance based on the purchase date; pre-issuance includes issuance up to the 10th of the following month. When pre-issued, tax invoice entry is not required, but it is a mandatory entry item when post-issued. 3. The Local LC is applied for by the exporter, and supporting documents include export permits, export contracts (denominated in foreign currency), etc. Documents that possess a format and content equivalent to an export contract are considered acceptable substitutes. 5. The timing for issuing a tax invoice is the time of supply of goods, and at that time, a tax invoice must be issued for the full amount.Machine translated
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