Commercial invoice against tax invoice
These get mixed up because most accounting systems produce one document called an invoice and expect it to do every job. It cannot. A commercial invoice is a customs valuation document. A tax invoice is evidence for a tax authority.
Any shipment crossing a border needs a commercial invoice. If the sale also carries tax that your buyer can reclaim, they need a tax invoice too, in the form their country requires. Exports are often zero-rated. In that case the tax invoice shows zero tax and states why.
| Commercial Invoice | Tax Invoice | |
|---|---|---|
| Read by | Customs at destination. | A tax authority, and your buyer's accountant. |
| States | Transaction value, Incoterms, HS codes, origin. | Tax charged, rate, and both parties' tax numbers. |
| Required fields | Set by customs practice. | Prescribed by the tax jurisdiction. |
| On exports | Always needed for commercial goods. | Often zero-rated, and must say so. |
| Corrections | Reissue, or amend the entry. | Credit note. |
Why exports usually show no tax
Most countries zero-rate or exempt exported goods, because tax is charged where the goods are used. But zero-rated is not the same as out of scope. You usually have to state the zero rate, and often the legal basis for it. You also have to be able to prove that the goods left the country. The transport document is the proof of export that supports the zero rating in an audit.
Get your buyer's tax number
If the destination has a VAT or GST system and your buyer intends to reclaim the tax, their registration number usually has to be on the document. A missing or wrong number can invalidate their claim. Ask for it when you take the order, not when you invoice.
The primary customs valuation document: what was sold, to whom, on what terms, and for how much.
Invoice showing the tax charged on a supply, in the form required for the buyer to reclaim input tax.
+Can one document be both?
Often yes, if it carries everything both readers need: HS codes, origin and Incoterms for customs, plus tax numbers and the tax treatment for the tax authority. Many exporters issue one combined document. It only works if nothing is missing for either reader.
+Do I charge tax on an export?
Usually not. But the rule is set by your own country, not the destination, and the conditions for zero-rating vary. Ask your accountant.
Try it with a real shipment.
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