This scenario is addressed is the Designated Zone guide. VAT will be due on import regardless hence will populate in the VAT return and same can be claimed as Input in Box 10 subject to normal recovery rules.

Further if Goods imported by Mainland Branch and then shift to DFZ & again treated as imported in DFZ branch hence twice RCM will be applicable while transfer between is out of scope in Tax Group. We can not treat transfer as export for mainland company Branch in DFZ. Then we should also pass adjustment?

Movement of goods from Mainland to DZ would not populate in the VAT return. Further, if there is possibility that a lot of such transfers back and forth would take place, perhaps consider temporary import declarations rather than normal clearances.

There is custom involvement and export documents being prepared for Custom Duty as well hence the receiving Branch in DFZ is being populated as a Single TRN although internal transfer is out of scope but FTA capture it while if you import from DFZ or DFZ company import from Mainland...its duplication hence required adjustment in Portal of the internal transfer due to Tax Group(branch& members) as per my understanding.

I have not encountered a situation where the purchase by DZ entity from Mainland gets populated as import where the goods were previously declared and Customs duty paid. There are temporary Customs declaration that can be considered such as Import for Re-export for temporary movements which will not populate in the VAT return. There are conditions attached to such declarations.

Thanks Sajith.