Import and Export Agency Business Accounting Formulas, Do You Really Know How to Use Them?

On the complex stage of international trade, import and export agency business is crucial. For many enterprises, understanding and skillfully applying relevant accounting formulas is like holding the key to unlocking the door to profit. Today, let us together delve into the mysteries of import and export agency business accounting formulas.

Import Agency Business Accounting Formulas

First, let's look at import agency business; calculating the cost of imported goods is a core aspect. The total cost of imported goods typically consists of cargo value, overseas freight, insurance premiums, import duties, consumption tax, value-added tax, and other components.

• Cargo Value: This refers to the agreed-upon price of goods with foreign suppliers, generally expressed in trade terms such as FOB (Free On Board), CFR (Cost and Freight), or CIF (Cost, Insurance, and Freight). For example, Mr. Tang entrusted Zhongmaoda to import a batch of goods, and the contract stipulated an FOB price of USD 100,000.
• Overseas Freight: The transportation cost from the foreign port of shipment to the domestic port of destination. Suppose the overseas freight for this batch of goods is USD 5,000.
• Insurance Premium: The cost of purchasing insurance for goods during transit. Insurance Premium = CIF Price × Insurance Rate × Insured Surcharge (the insured surcharge rate is usually 110%). If calculated based on CIF price, insurance premium calculation is essential.
• Import Duty: Import Duty = Dutiable Value × Duty Rate. The dutiable value is generally the CIF Price. Assuming the duty rate for this batch of goods is 10%, if the CIF price is USD 105,000 (including USD 5,000 freight), then Import Duty = 10.5 × 10% = USD 10,500.
• Consumption Tax: For certain specific goods such as tobacco, alcohol, and cosmetics, consumption tax needs to be paid. Ad Valorem Consumption Tax = (Dutiable Value + Import Duty) ÷ (1 - Consumption Tax Rate) × Consumption Tax Rate.
• Value-Added Tax: Value-Added Tax = (Dutiable Value + Import Duty + Consumption Tax) × Value-Added Tax Rate.

Import agency service fees are generally charged at a certain percentage of the imported goods' value. For example, Zhongmaoda might charge a 3% agency service fee; taking a cargo value of USD 100,000 as an example, the service fee = 10 × 3% = USD 3,000.

Export Agency Business Accounting Formulas

Export agency business accounting is equally complex and critical. Export commodity sales revenue is recognized based on the FOB price.

• If Mr. Tang entrusted Zhongmaoda to export a batch of goods, and the transaction price was a CIF price of USD 200,000, including overseas freight of USD 8,000 and insurance premium of USD 2,000, then the FOB price = CIF Price - Overseas Freight - Insurance Premium = 20 - 0.8 - 0.2 = USD 190,000.
• Export tax rebate is an important part of revenue in export business. Tax Rebate Amount = Input Tax Amount of Exported Goods - Non-Refundable Tax Amount of Exported Goods. Non-Refundable Tax Amount of Exported Goods = FOB Price of Exported Goods × RMB Exchange Rate × (VAT Rate - Tax Rebate Rate). Assuming the VAT rate for this batch of goods is 13%, the tax rebate rate is 10%, and the exchange rate is 6.5, then the Non-Refundable Tax Amount of Exported Goods = 19 × 6.5 × (13% - 10%). Tax Rebate Amount = Input Tax Amount - Non-Refundable Tax Amount of Exported Goods.
• Export agency service fees are generally also charged at a certain percentage of the export value, for example, 2%. Then the service fee = 20 × 2% = USD 4,000.

In import and export agency business accounting, accurately applying these formulas can help enterprises clearly grasp costs and revenues and make more informed decisions. Whether importers or exporters, collaborating with professional agency companies like Zhongmaoda and effectively utilizing these accounting formulas can help them advance steadily in the tide of international trade. We hope everyone will continuously practice and summarize in their actual business to better control the financial intricacies of import and export agency business.