Whether zero-rated and general tax rates can be mixed in multi-stage transactions
Machine translated
When an export is carried out in the form of Domestic Manufacturer A → Domestic Company B → Domestic Company C → Overseas Buyer D,
a Purchase Confirmation was issued between B–C, but I am wondering if it is possible to issue a zero-rated tax invoice by issuing a Purchase Confirmation between A–B, without correcting the previously issued general tax invoice to a zero-rated tax invoice.
If this is possible, is there any possibility that the first Purchase Confirmation might be canceled because a zero-rated tax invoice was not issued between B–C afterwards?
Answer 1
- 0The issue of whether a Purchase Confirmation can be issued and the issue of whether a zero-rated tax rate can be applied are related, but they are somewhat different. The issuance of a Purchase Confirmation is based on the Foreign Trade Act, while the scope of the zero-rated tax rate is based on the Value Added Tax Act. A secondary Purchase Confirmation can be issued based on a primary Purchase Confirmation. If a primary Purchase Confirmation has been issued, it is correct to issue a zero-rated tax invoice, and the same applies to the secondary one. However, as far as I am aware, the VAT Act rulings are not clear on whether it is mandatory or optional to issue a zero-rated tax invoice in cases where a Purchase Confirmation is issued but a zero-rated tax invoice is not. Unless there is a specific reason, the issuance of a Purchase Confirmation and a zero-rated tax invoice should go hand in hand. That said, since a Purchase Confirmation is also related to the recognition of indirect (trade) export performance, it is my opinion that a Purchase Confirmation cannot be canceled solely due to the failure to issue a zero-rated tax invoice, provided that the goods were indeed purchased for export purposes and used for actual export.Machine translated
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