Titles of Invoices: Commercial Invoice, Tax Invoice, Proforma Invoice

Invoice titles could create confusion among exporters and importers in some occasions. 

The biggest problem in regards to titles of invoices occurs when the payment term is letter of credit.

"Invoice" and "commercial invoice" are the main titles of invoices in circulation in international trade. 

Tax invoice and proforma invoice are another two common invoice titles.

Today I would like to explain the differences between various invoice titles.



Are there any meaningful differences between titles of the invoices? 

There is a clear difference exists between a commercial invoice and a proforma invoice. 

Provisional invoice, performa invoice, proforma invoice or pro-forma invoice, however named, only represents a potantial future sale. 

The terms and conditions stated on the proforma invoice may or may not be final.

Commercial invoice, on the other hand, represents a definite transaction conditions. 

As a result proforma invoices are not accepted by customs for the import custom clearance operations for the sales of commercial goods.

You can read detailed differences between proforma invoice and commercial invoice from this link.

Are there any rules that prohibits presentation of proforma invoices instead of commercial invoices?

Letter of credit rules do not accept a presentation of a proforma invoice instead of a commercial invoice:

ISBP 745 states that "When a credit requires presentation of an “invoice” without further description, this will be satisfied by the presentation of any type of invoice (commercial invoice, customs invoice, tax invoice, final invoice, consular invoice, etc.). 

However, an invoice is not to be identified as “provisional”, “pro‐forma” or the like."

Customs do not accept proforma invoice instead of a commercial invoice during custom clearance operations:

According to Export Helpdesk, a website prepared by European Union in order to help exporters located in developing countries, EU customs demand signed one original and one copy of commercial invoice during the import custom clearance of the commercial goods.


NOTE: Please do not confuse commercial sales with sample or gift shipments via express couriers. 

You should present a proforma invoice to the customs for goods with small value especially goods value less than 150/100USD.

Conclusion:
  1. There are various types of invoices available in international trade. 
  2. The biggest difference is between commercial invoices and proforma invoices. 
  3. Letters of credit rules prohibits presentation of proforma invoices instead of commercial invoices. 
  4. According to letter of credit rules, when a credit requires presentation of an “invoice” without further description, this will be satisfied by the presentation of any type of invoice (commercial invoice, customs invoice, tax invoice, final invoice, consular invoice, etc. 
  5. Customs always demand commercial invoices during the import custom celarance operations.
Blogger Widget