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RECOGNITION OF SALES WHERE BUYER'S ORDER IS PASSED TO OVERSEAS MANUFACTURER
According to a recent MOF ruling, where a company (A) accepts an order from another company (B), forwards such an order to an overseas manufacturer (C), and applies for im-port directly under the name of the buyer (B), such a transaction is considered an import transaction conducted by B, if all the transaction documents that C issues, e.g., commercial in-voice and bill of lading, etc., are addressed to B, and A is not held liable for any defects in the goods, rather than the sale of goods by A. As such, A should, based on the amount of com-mission or service charge it collects, and ac-cording to the source of the income, issue either a two-piece Government Uniform Invoice (GUI) to C; or a three-piece GUI to B, and impose a 5% value-added-tax accordingly. However, if A signs a sales contract with each of B and C so that A is held liable for any defects in the goods, such transaction should be considered as a sale of goods by A, and consequently, A should, ac-cording to the procedures of handling the sale and the purchase of goods, issue a three-piece GUI to B at the total amount of sales.