Whether to report zero-rated VAT when invoicing via Debit Note after free-of-charge export
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I am a corporate entity. We are planning to collect several items that were previously exported to our overseas subsidiary free-of-charge and invoice them via a Debit Note. In this case, I have the following questions:
1. Do we need to report these items as zero-rated VAT?
2. When filing the VAT return, should these items be included in the Statement of Details of Zero-Rated VAT Attachments?
3. Should we submit the Debit Note and the foreign currency remittance confirmation as supporting documents?
4. Will there be any issues with charging for the goods via a Debit Note after they were initially exported free-of-charge?
Answer 1
- 0The scope of goods subject to the zero tax rate is defined as "the removal of domestic goods from the country" (VAT Act, Article 21, Paragraph 2, Item 1). In other words, the removal of goods from the country is considered an export subject to the zero tax rate, covering not only paid exports but also free exports where no foreign exchange settlement occurs; however, certain items such as samples are exceptionally excluded. For this reason, in the case of free exports, there are many instances where zero-rate related reporting must be filed. Meanwhile, your question states that despite it being a free export, a Debit Note is issued to receive foreign currency deposits, which appears to be contradictory. Please consult further with your tax accountant regarding this matter.Machine translated
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