Proof of Purchase Confirmation (PO) for Safety Stock and Export Deadlines After Issuance
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I am currently engaged in the business of purchasing goods domestically and exporting them to overseas affiliates. All goods purchased domestically are exported, and I issue Purchase Confirmations to the suppliers. Typically, purchased goods are exported within one month, but since incoming stock is often inconsistent, I intend to maintain a constant safety stock in the warehouse equivalent to one month's worth of sales.
1. When applying for a Purchase Confirmation, I have previously attached Export Declarations. However, I heard that this can be replaced by a PO received from the overseas customer. I am wondering what specific details must be included in the PO (specifically, whether unit prices, total amounts, and signatures are required in addition to the supply quantity), and what actions are necessary if the unit price stated in the PO changes.
2. I have heard that a Purchase Confirmation must be issued to the supplier within a certain period after issuing a zero-rated tax invoice, and delays may result in penalty taxes. Once a Purchase Confirmation is issued based on a PO, is there a specific export deadline for the inventory stored in the warehouse? I am inquiring because I am concerned about whether exceeding the deadline after issuing a Purchase Confirmation could lead to penalty taxes or disadvantages during a tax audit in practice.
Answer 1
- 01. When issuing a Purchase Confirmation, a foreign currency-denominated goods supply contract can be used as supporting documentation. If a PO is used instead of a contract, it is expected that the PO should include the quantity, amount, unit price, and signature in a manner equivalent to a contract. If the unit price or other terms change, the supporting documents must be revised if the change is significant or if the change causes the purchase amount on the Purchase Confirmation to exceed the export amount. 2. A Purchase Confirmation must be issued by the 10th day of the month following the month in which the purchase occurred. If issued late, the tax invoice must initially be issued as a standard invoice, and then revised to a zero-rated invoice once the Purchase Confirmation is issued. The export deadline is generally determined to be within 2 years, following the performance period for earning foreign exchange.Machine translated
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