Struggling with whether to choose import customs declaration or re-export trade for company cargo, unsure about their differences, pros and cons, and how to decide. The best answer states that the import customs declaration process is direct but may incur high tariffs, while re-export trade can avoid trade barriers but involves complex logistics and risks. The choice requires considering cargo nature, policies, costs, etc. If speed is a high priority, choose import customs declaration; if aiming to avoid barriers and reduce tariffs, choose re-export trade.
How are Re-export Trade Taxes and Fees Calculated? Find Out Now!
Resolved
My company plans to engage in re-export trade business. I haven't dealt with this before and am unclear about how taxes and fees are calculated. I'd like to know which taxes and fees are involved in re-export trade, what the calculation methods are, and if there are any special policies or considerations. I hope friends with knowledge in this area can explain it to me, so I can have a clear understanding and plan operations in advance.
Trade Expert Insights Answers
Kevin HuangYears of service：3Customer Rating：5.0
E-Commerce Export AdvisorStart a Chat
Re-export trade generally does not involve customs duties, as the goods do not enter the customs territory of the home country. However, it may involve Value-Added Tax (VAT). In China, if re-export trade meets certain conditions, it may be eligible for tax exemption policies, such as sales to overseas entities and complete consumption abroad. If the conditions for tax exemption are not met, VAT must be paid as per regulations, usually at a rate of 13%. Tax payable = current output VAT - current input VAT. Output VAT = sales amount × tax rate.
Additionally, stamp duty may be involved, calculated at three ten-thousandths of the purchase and sales contract amount. At the same time, it is crucial to properly keep documents such as proof of ownership transfer for goods, in preparation for tax audits. Policies may vary slightly in different regions, so it is advisable to confirm with local tax authorities.
Daniel KimYears of service：4Customer Rating：5.0
Commodity Inspection and Quarantine ConsultantStart a Chat
If re-export trade involves services like warehousing, there may be related taxes and fees for warehousing services, such as Urban Maintenance and Construction Tax, and Education Surcharge. These are based on the actually paid VAT and consumption tax amounts. For urban areas, the Urban Maintenance and Construction Tax rate is 7%, and the Education Surcharge rate is 3%.
Emma ZhaoYears of service：3Customer Rating：5.0
Export Documentation SpecialistStart a Chat
From a financial perspective, re-export trade involves foreign exchange receipts and payments. Although there are no specific taxes or fees for foreign exchange, attention should be paid to cost changes brought about by exchange rate fluctuations. When settling, exchange rate changes may affect profits, so this factor must be fully considered when calculating costs.
Thomas LiYears of service：7Customer Rating：5.0
Import Licensing AdvisorStart a Chat
If re-export trade is conducted through intermediaries such as freight forwarders, freight forwarding fees may arise. These fees may include some additional taxes and surcharges. For example, freight forwarding companies may pay VAT for providing services, which will ultimately be reflected in their charges.
Michael ZhangYears of service：10Customer Rating：5.0
Customs Clearance SpecialistStart a Chat
If insurance costs are incurred for re-export goods during transit, when insurance companies collect premiums, relevant taxes and fees for the insurance industry, such as stamp duty, may be involved. The specific percentage is calculated based on a certain proportion of the insurance contract amount.
Sophia WangYears of service：6Customer Rating：5.0
International Logistics CoordinatorStart a Chat
Conducting re-export trade in some free trade ports or specific regions may offer more favorable policies. For example, some free trade ports exempt re-exported goods from customs duties and VAT. It is advisable to pay attention to local regional policies.
Linda GuoYears of service：3Customer Rating：5.0
Trade Dispute MediatorStart a Chat
For documents related to re-export trade, such as contracts and bills of lading, their authenticity and completeness must be ensured. This is crucial for tax and fee calculation and tax declarations, to avoid tax risks due to documentation issues.
Richard WuYears of service：8Customer Rating：5.0
Global Trade Operations ExpertStart a Chat
Pricing for re-export trade must be reasonable. If pricing is unreasonable, tax authorities may make adjustments, which in turn affects the calculation of VAT and other taxes and fees. Market pricing principles must be followed.
David ChenYears of service：10Customer Rating：5.0
Trade Compliance AdvisorStart a Chat
Corporate income tax should also not be overlooked. Profits from re-export trade must be included in the taxable income to calculate and pay corporate income tax. The general tax rate is 25%; for those with preferential policies, the preferential rate applies.