Zero-rate tax application when receipt, shipment, and invoice dates differ
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We have a contract under FOB terms, and the payment term is "AGAINST ORIGINAL SHIPPING DOC." according to the zero-rate tax rules. After completing the production of the contracted products, we received a shipment request (CARGO CLOSING and ETD) and moved the products to the pier first. Subsequently, after receiving the B/L, we issued the purchase authorization and the invoice.
There are conflicting opinions regarding this: some suggest that zero-rate tax cannot be applied because there is a gap of several days between the pier receipt date and the invoice/purchase authorization issuance date, meaning the release schedule and the invoice date do not match. On the other hand, others argue that there should be no issue since receiving the B/L takes time under FOB terms and the actual departure date is separate.
Please confirm whether there are any issues with applying the zero-rate tax when the dates for receipt, shipment, invoice, and purchase authorization issuance differ as described above.
Answer 1
- 0Transactions requiring the issuance of a Purchase Confirmation are considered indirect exports and are domestic transactions. In domestic transactions, the time of supply for goods is the time when the goods are delivered. Due to the nature of indirect exports, which involve a supplier, a buyer (exporter), and an importer, the domestic transaction between the supplier and the buyer is distinct from the export transaction between the buyer and the importer; the time of supply for the export transaction is the shipment date. In the transaction between the supplier and the buyer, the time of delivery of the goods becomes the timing for issuing the invoice, so the time of supply should be determined based on the contract between the two parties.Machine translated
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