A company plans to export products through an agency company and is confused about who pays taxes in agency exports, what tax types are involved, and the tax payment process. The best answer states that the principal generally pays taxes as they are the actual owner of the goods, and the taxes involved include VAT and customs duties. The VAT treatment differs for manufacturing enterprises and foreign trade enterprises. The principal needs to declare to the tax authorities and provide relevant documents for tax refunds or exemptions, while the agent assists in preparing the documents.
Does the principal in agency export need to pay taxes? Come and find out!
Resolved
Our company plans to entrust another company to act as an agent for product export. We want to ask if the principal in agency export needs to pay taxes? If so, generally what types of taxes are involved? Is the tax payment process complicated? We hope to receive a detailed answer so that we can make relevant preparations in advance to avoid tax issues that may affect the smooth progress of export business.
Trade Expert Insights Answers
Whether the principal in agency export needs to pay taxes depends on the situation. Generally, if the principal is a manufacturing enterprise and adopts the offset and refund system, after the goods are exported and sold, VAT and consumption tax are exempted for the exported goods. The corresponding input tax amount is offset against the VAT payable for domestic sales, and any remaining amount is refunded. If the principal is a foreign trade enterprise and implements the exemption and refund system, VAT is exempted for the exported goods, and the corresponding input tax amount is refunded.
The main taxes involved are VAT and consumption tax. If the exported goods are subject to consumption tax, the treatment of consumption tax also needs to be considered.
Regarding the tax payment process, manufacturing enterprises need to declare for offset and refund according to regulations, and foreign trade enterprises need to declare for exemption and refund. Enterprises usually need to complete the relevant data entry on the electronic tax bureau, generate the declaration data, and then carry out formal declaration, and provide the corresponding paper documents as required (some regions have implemented paperless declaration and do not require submission of paper documents). Specific procedures and requirements can be consulted with the local tax authority.
Generally, the VAT treatment for the principal is quite critical. If it is treated as domestic sales, the principal needs to calculate and pay VAT. Attention should be paid to the specific nature of the exported goods and the provisions of tax policies to avoid underpayment or mispayment of taxes.
If the goods exported by the principal meet relevant tax preferential policies, such as for some specific agricultural products, there may be tax reductions or exemptions, and it may not be necessary to pay taxes. It depends on the specific product.
Whether taxes are paid also relates to the agency agreement. If the tax responsibilities are clearly divided in the agreement, the agreement will be followed. However, basic tax regulations must still be observed.
If the exported goods involve consumption tax, and the principal is the taxpayer of consumption tax, consumption tax needs to be paid. However, if consumption tax has already been levied at the production stage, there is generally a refund policy for export.
When acting as an agent for export, the principal should pay attention to changes in export tax refund rates, which will affect whether taxes are paid and the amount of tax refund. Different products have different refund rates, and accurate calculations are necessary.
For small-scale taxpayer principals, exported goods are tax-exempt but not tax-refundable. There are no complex offset and refund calculations like those for general taxpayers, but exemption declarations must still be made according to regulations.
When handling tax matters, the principal must obtain legal and valid purchase invoices in a timely manner, which is very important for determining whether taxes are paid and for tax refunds, otherwise it may affect tax treatment.
If the principal cannot collect all supporting documents within the prescribed time limit after exporting goods, it may be treated as domestic sales and taxes may need to be paid. Therefore, it is important to control the time nodes.