It is stated that the company is involved in re-export trade, with goods shipped directly from suppliers to customers. The query is whether re-export trade revenue should be recognized at the time of contract signing or when goods are delivered to the customer, and what factors need to be considered for revenue recognition. The best answer points out that revenue is generally recognized when the main risks and rewards related to the ownership of goods are transferred to the buyer, when payment is expected to be recovered, and when costs can be reliably measured. Attention should be paid to various factors such as contract terms and shipping documents.
What Taxes Are Levied on Re-export Trade? Learn More!
Resolved
My company intends to conduct re-export trade business. Having no prior experience, we are completely bewildered by the taxes and fees involved. I would like to inquire: Which specific taxes apply to re-export trade? Will it be very complicated? Are there any differences in taxation compared to general trade? I hope a professional can provide a detailed answer. Thank you!
Trade Expert Insights Answers
Re-export trade generally involves tax categories such as Value-Added Tax (VAT) and customs duties, but specific situations vary depending on the actual place of trade and the policies of different countries.
Firstly, regarding VAT, when goods do not enter the domestic customs territory, domestic VAT is generally not required. However, if goods undergo simple processing in the country before re-export, VAT may need to be paid depending on the circumstances.
Secondly, concerning customs duties, since goods do not enter the domestic consumer market, import duties are usually not levied. However, if value-added operations are performed on the goods in the country, it may affect duty calculations.
Unlike general trade, where goods enter the domestic customs territory for sale and incur import duties, import VAT, etc., re-export trade goods only transit through the country, leading to significant differences in tax policies. In practice, it is recommended to consult with professional institutions like Zhongmaoda to ensure an accurate understanding of tax policies and compliant business operations.
In re-export trade, stamp duty may sometimes be involved. If relevant contracts are signed, it is paid as a certain percentage of the contract amount. For instance, sales and purchase contracts might require a stamp duty of three ten-thousandths, subject to local regulations.
Some regions may have tax and fee regulations concerning fund flows in re-export trade. For instance, operations like foreign exchange settlement, though uncommon, should ideally be confirmed with local tax and foreign exchange administration departments before commencing business.
If re-export trade involves warehousing services, property tax and other related taxes may apply. If self-owned property is used for storing re-export goods, property tax must be paid based on the remaining value of the property.
If re-export trade involves freight forwarding services, the freight forwarding company, upon earning income from providing these services, may be subject to VAT and surcharges. This could indirectly impact the re-export trade enterprise itself.
Re-export trade may involve port construction fees. For operations like loading and unloading goods at the port, these fees are calculated and paid based on the goods' weight or volume.
If insurance services are involved during re-export trade, the insurance company collecting premiums will pay relevant taxes and fees, which is indirectly related to re-export trade. Re-export trade enterprises should pay attention to whether insurance costs include tax and fee expenses.
In certain special circumstances, if re-export goods undergo services like quality inspection at the transit location, the service provider may be subject to VAT and other taxes, which impacts the re-export trade enterprise's costs.
If re-export trade involves intellectual property-related fees, such as trademark licensing, paying these fees may incur withholding income tax and other taxes and fees; relevant regulations should be observed.