Export Agents Daring to Play ’Dual Identity’? Beware of Tax Bombs!

Mr. Cong recently encountered a troubling issue: his overseas client, with whom he had collaborated for many years, suddenly proposed that he conduct export agency business under a 'deemed self-operated' model. It sounded like a way to both secure orders and mitigate risks, but CFO Mr. Cong sent a late-night warning email – this seemingly win-win solution might conceal a fatal tax landmine.

What is Deemed Self-Operated? Customs-Recognized 'Dual Identity'

In traditional export agency, the agent only charges a service fee, and the true buying and selling relationship occurs between the principal and the overseas client. However, under the deemed self-operated model, customs directly identifies the agent as the export entity while also acknowledging their agency status. This special identity recognition is like receiving both 'athlete' and 'referee' work permits simultaneously.

• Document Processing: Agents can declare customs and collect foreign exchange in their own name.
• Tax Refund Eligibility: Enjoy the same export tax refund rights as manufacturing enterprises.
• Responsibility Assignment: Still responsible for the rights and obligations stipulated in the agency agreement.

Hidden Costs Behind Three Major Temptations

A cross-border e-commerce platform once reported that businesses adopting the deemed self-operated model saw an average 40% reduction in tax refund cycles, but these sweet figures conceal a need for vigilance:

1. Doubled Tax Audit Risk
Tax authorities are particularly sensitive to this 'dual identity'. The Zhongmaoda case database shows that among businesses that had tax refunds recovered for this reason in 2023, 83% had deficiencies in document management.

2. Hidden Shoals in the Capital Chain
When agency fees are settled mixed with cargo value, it may trigger foreign exchange regulatory warnings. Mr. Cong team discovered that one client had USD 2 million in cargo payments frozen for 3 months due to mixed account usage.

3. Compliance Costs Increase Instead of Decrease
It requires establishing two complete sets of business ledgers, and the logic between the 'operating entity' and 'shipper' on customs declarations must be perfectly aligned, which could be an unbearable burden for small and medium-sized agents.

Four-Step Risk Aversion Guide

If this cooperation model must be accepted, it is recommended to take these protective measures:

• Clearly define 'deemed self-operated' clauses and responsibility allocation in the agency agreement.
• Establish a dedicated foreign exchange account to ensure traceable capital flows.
• Retain a complete chain of proof for title transfer.
• Conduct quarterly tax health checks.

Rethinking the Essence of Business

When we examine the deemed self-operated model under a magnifying glass, it actually reflects a deeper industry dilemma: against the backdrop of slowing export growth, agents are transforming from 'intermediaries' to 'risk bearers'. This model might solve a temporary problem, but in the long run, building true core competitiveness is the way to break through.

Are you also facing similar business transformation choices? Feel free to share your practical experience in the comments section. Next time, we will analyze: When overseas buyers suddenly demand DDP terms, how to maintain profit margins?