Post-issuance of Purchase Confirmations and Zero-Rated VAT when purchasing inventory with unconfirmed export destinations
Machine translated
We are planning to purchase telecommunications equipment from domestic manufacturer A and export it to our overseas partners, and we are inquiring to expand our inventory levels.
1. I understand that when purchasing at a zero-rated VAT rate, a Purchase Confirmation must be issued to the manufacturer to certify their export performance. However, in the case of purchasing inventory, the export destination is not yet confirmed at the time of purchase (no export evidence available). In this case, pre-issuance seems difficult, so it would likely need to be a post-issuance. Should we first proceed with a taxable purchase, and then, as each export occurs, cancel the tax invoice for that specific quantity and re-purchase it as a zero-rated purchase?
2. If the purchase falls within the first period of the taxable period, I understand that the deadline for issuing a Purchase Confirmation eligible for the zero-rate is July 25th of that year. If the purchased inventory is not exhausted by July, I am wondering if it is correct to understand that applying the zero-rate to the remaining stock will be difficult, and thus we would need to either return and re-purchase the items or forgo the zero-rated purchase.
3. If manufacturer A does not need to have their export performance recognized, is there any issue with proceeding from a taxable purchase to a zero-rated export?
Answer 1
- 01. If you cannot issue a Purchase Confirmation because the export destination has not been finalized at the time of the initial purchase, you should first receive a standard tax invoice through a general purchase. Once the export destination is confirmed, you can receive a revised zero-rated tax invoice by issuing the Purchase Confirmation retroactively. Since it appears practically difficult to issue one standard tax invoice and then split it into multiple revised zero-rated tax invoices, it would be better to issue multiple standard tax invoices and then revise them on a case-by-case basis. 2. Yes, that is correct. The zero-rate application is only available for Purchase Confirmations issued by the VAT filing deadline of July 25th. 3. Applying the zero-rate through the issuance of a Purchase Confirmation is optional, so choosing taxable purchases will not cause any issues (however, the issuance of a Purchase Confirmation becomes mandatory if requested by a subcontractor subject to the Subcontracting Act).Machine translated
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