Expansion of Local L/C (Purchase Confirmation) Issuance (Zero-Rate Tax) — Purchase (Supply) Date, Issuance Limits, and Export Amount Standards
Machine translated
We are an electronic component manufacturer, and 80% of our sales are exports. Most of our suppliers are liquid chemical companies, and we use various substances from multiple suppliers by mixing them. To expand the application of the VAT zero-rate, we intend to issue Purchase Confirmations to our domestic suppliers as much as possible.
The current procedure is: Supplier delivery (1st–30th of the month) → Supplier issues zero-rate tax invoices in bulk at the end of the month → Purchase Confirmation is issued within the following month after monthly closing (Zero-rate tax invoice first, Purchase Confirmation later). For export evidence, we use Export Declarations or foreign currency remittance amounts from export sales.
1. Is it permissible to set the "Purchase (Supply) Date" in item No. 6 of the Purchase Confirmation to the 1st of the month? (Currently, we only use export performance from the last week of the month and enter the day before the export evidence date as the "Purchase (Supply) Date," but we want to utilize more export performance to issue confirmations to more suppliers.)
2. Is it problematic to issue a Purchase Confirmation for the entire foreign currency amount stated on the zero-rate tax invoice issued by the supplier? (Since the supplied materials are liquids, it is difficult to determine exactly how much was used in product production, and the purchase amount may differ from the usage amount due to evaporation or solidification, but we use a consistent amount every month.)
3. We intend to issue Purchase Confirmations to as many suppliers as possible, regardless of whether the supplier imports goods. If question No. 1 is possible, are there any issues with issuance as long as there is sufficient export performance?
4. When entering information from the Export Declaration as export performance, should the export amount be the FOB price in field No. 46 or the settlement amount in field No. 49?
Answer 1
- 0[Question 1] Is it permissible to issue item number 6, 'Purchase (Supply) Date' of the Purchase Confirmation as the 1st of the month? [Answer 1] Yes, it is possible. Since a Purchase Confirmation can be issued both when intending to purchase and after a purchase has been made, you can designate the 1st of the month to apply for a Purchase Confirmation for goods purchased during that month. However, since the issuance limit for the Purchase Confirmation is within the export amount limit, it can only be issued as long as the total purchase amount does not exceed the export amount stated in the export supporting documents. Furthermore, this is on the condition that it is not used for domestic consumption. [Question 2] Is it problematic to issue it for the entire foreign currency amount of the zero-rated tax invoice issued by the supplier? [Answer 2] As with Answer 1, there is no problem as long as the total amount of the purchased goods is within the export amount limit of the relevant export supporting documents. Of course, this is on the condition that it is not used for domestic consumption. [Question 3] Can it be issued to all suppliers regardless of whether the supplier has imported goods? [Answer 3] As with Answer 1, there is no problem as long as the total amount of the purchased goods is within the export amount limit of the relevant export supporting documents, provided that it is not used for domestic consumption. [Question 4] When entering information from the Export Declaration for export performance, should the export amount be the FOB price in field 46 or the settlement amount in field 49? [Answer 4] When citing the Export Declaration as the export supporting document, please enter the FOB price as the export amount.Machine translated
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