The company plans to engage in transit trade and, lacking experience, is asking about the key aspects to consider. The best answer highlights that when conducting transit trade, it's crucial to prioritize goods ownership, select reliable logistics partners, accurately process documents, understand tax policies to avoid double taxation, and also be mindful of trade risks by investigating the creditworthiness of collaborators.
Does Processing Re-export Trade Really Require Paying Taxes?
Resolved
I'm currently considering engaging in processing re-export trade, but I'm not very clear about the tax implications. I'd like to ask, does this processing re-export trade model require paying taxes? If it does, what types of taxes are generally involved? Will policies in different regions vary significantly in this regard? I hope someone knowledgeable can explain it to me in detail so I can have a clear understanding and plan ahead.
Trade Expert Insights Answers
Whether processing re-export trade is subject to tax needs to be considered on a case-by-case basis. Generally, re-export trade goods do not enter the national customs territory, only undergoing transit, storage, processing, etc., at domestic ports or in bonded areas. In this scenario, because the goods are not actually imported into the country, import duties and import-related VAT and consumption tax are usually not required. However, if goods enter the national customs territory for processing or other operations before being re-exported, some taxes and fees may be involved.
For the processing stage, if processing occurs domestically, the processing enterprise may be subject to VAT, paid on the added value from processing. If imported materials are used for processing and comply with relevant processing trade policies, such as handbook management models like processing with supplied materials or processing with imported materials, then upon handbook verification, provided there are no violations or domestic sales, import duties and import-related VAT and consumption tax on imported materials can be temporarily exempted or refunded after verification. Policies will vary in different regions; for example, some special economic zones may have more favorable policies. It is recommended to consult local customs and tax authorities for detailed information.
In processing re-export trade, if goods only make a brief stop at a domestic port without substantial processing, generally no taxes are required. However, if there is simple processing, such as packaging changes, it depends on local regulations; some places may levy some taxes and fees on this part of the processing.
If processing re-export trade involves domestic processing facility rental, related taxes and fees for facility rental must also be considered. Additionally, if the processing generates pollutant emissions, there might be environmental taxes or similar charges.
If re-export trade involves inspection and quarantine, there may be related fees, which, although not strictly taxes, are still costs. As for the processing part, it depends on the nature of the processing; complex processing and simple processing may have different tax treatments.
If processing re-export trade is conducted in a bonded area, policies are relatively lenient. Goods undergoing processing, storage, etc., within a bonded area generally do not require tax payment before leaving the zone; upon exiting, whether taxes are due and what types of taxes are due are determined by the actual flow.
Processing re-export trade involves transportation, and transportation costs may incur stamp duty. Although the stamp duty amount is relatively small, it should not be overlooked; it is calculated as a certain percentage of the transportation contract amount.
From a foreign exchange perspective, the process of receiving and settling foreign exchange for re-export trade generally does not involve taxation, but it must comply with foreign exchange administration regulations. If the processing stage involves outward payments in foreign currency, some taxes and fees, such as corporate income tax, may need to be withheld and paid.
Tax policies on re-export trade vary significantly across different countries. Before commencing business, it is crucial to study the policies of both the target country and your own country to avoid increased costs or legal risks due to tax issues.
If equipment used in processing re-export trade is imported, imported equipment may be subject to customs duties and VAT. If it complies with specific policies, such as imported equipment for encouraged projects, there may be tax reductions or exemptions.