Accounting Treatment for Re-importing Defective Goods After Export and Re-exporting After Repair
Machine translated
Defective packaging was identified in exported goods at an overseas location, leading to their re-importation. We now intend to re-export them after re-packaging. Since we did not receive any tax exemptions upon re-importation, we paid VAT and received an import tax invoice. I am wondering how this should be handled from an accounting perspective.
- The original export was recorded as sales; should this sale be canceled?
- How should the re-importation be accounted for (as a purchase?)
- How should the subsequent re-export be accounted for?
Answer 1
- 0Generally, when goods are brought back due to a return, it is correct to report them by deducting the amount from the Value Added Tax (VAT) tax base at the time of re-entry. However, in cases where the goods are repaired after being returned or re-exported as the same product, the amount should not be deducted from the tax base on the date of re-entry. Furthermore, it should not be reported as part of the VAT tax base upon re-export, and there is no need for separate accounting treatment for the re-export. The import tax invoice issued at the time of re-entry can be claimed for deduction, and it does not need to be separately accounted for as inventory or other items.Machine translated
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