Issuance of Purchase Confirmation and Application of Zero Tax Rate for Overseas Construction Labor Service Subcontracting
No translation in your language yet — showing the English version
I would like to inquire whether it is possible to issue a Purchase Confirmation in the following case. The parties involved are A (Overseas construction importer), B (Domestic service exporter), and C (A domestic subcontractor that has entered into a construction labor service contract with B). B provides overseas construction labor to A and receives payment in foreign currency. C has entered into a service subcontract with B for the supply of overseas construction labor; C sends the construction labor overseas and receives payment in KRW from B in Korea. In this case, can B issue a Purchase Confirmation to C?
Answer 1
- 0✓1. Issuance of a Purchase Certificate is possible. Under the Foreign Trade Act, a Purchase Certificate is applied for by a party intending to purchase raw materials or components for earning foreign exchange. Since the scope of raw materials and components for earning foreign exchange includes services (Article 2 of the Enforcement Decree of the Foreign Trade Act), the issuance of a Purchase Certificate is possible. 2. However, while the issuance of a Purchase Certificate allows for the verification of export performance, it does not permit the application of a zero tax rate under the Value Added Tax Act. The application of a zero tax rate based on the issuance of a Purchase Certificate follows the provisions of the Value Added Tax Act. According to the current Value Added Tax Act, cases where a zero tax rate is applicable upon the issuance of a Purchase Certificate for the provision of services are limited to "processing services for export goods supplied via a Purchase Certificate" (Article 33, Paragraph 2, Item 4 of the Enforcement Decree of the Value Added Tax Act). Accordingly, it is determined that for services other than processing services for export goods, applying a zero tax rate will be difficult even if a Purchase Certificate is issued.Machine translated
Write an answer
0
Comments 0