Considering engaging in transshipment trade business, wanting to know if taxes are required and why. The best answer indicates that from the perspective of turnover tax, transshipment trade does not incur value-added tax because the goods do not enter China's domestic consumption and circulation. If profits are generated, corporate income tax will be involved. Signing contracts may incur stamp duty, which needs to be determined based on the substance of the trade and relevant tax regulations.
What are the types of transshipment trade? Come and find out!
Resolved
I've been quite interested in transshipment trade lately and want to delve deeper into it. I heard that there are different types of transshipment trade, so I'd like to ask what specific types there are? I hope you can explain in detail, ideally with some practical examples to help me understand. Thank you.
Trade Expert Insights Answers
Transshipment trade is mainly divided into the following types:
First is direct transshipment trade, where goods are transferred to the consuming country without any processing in the transit country, remaining in their original state. For example, a batch of clothing from China is transshipped to the United States via Singapore, with no processing done to the goods in Singapore.
Second is indirect transshipment trade, where goods undergo simple processing in the transit country before export. For instance, primary plastic products from China are shipped to Malaysia, undergo simple processing such as assembly, and are then sold to Europe.
Third is documentary transshipment trade, where goods are shipped directly from the producing country to the consuming country, but the documents are handled by the transit merchant. For example, when Zhongmaoda receives a client's request, it coordinates with the manufacturer to ship the goods directly to the destination, while Zhongmaoda handles and transmits the relevant trade documents.
Fourth is re-export transshipment trade, where the transit merchant first imports goods into the transit country and then re-exports them to other countries. For example, Zhongmaoda imports electronic products from South Korea and then re-exports them to India.
Another type is offshore transshipment trade, where both trading parties have no direct connection with the transit location, and the goods do not enter the transit location. Instead, trade operations are conducted through a company in the transit location. For instance, companies in Brazil and South Africa conduct trade through Zhongmaoda, with goods shipped directly from Brazil to South Africa, and Zhongmaoda only handles the trade process and documents.
Bonded zone transshipment trade is also common, where goods are first stored in a bonded zone before being transshipped for export. For example, automotive parts from Japan are stored in a Chinese bonded zone and then transshipped to Vietnam, utilizing the warehousing advantages and policy conveniences of the bonded zone.
Within transshipment trade, there is value-added processing transshipment trade, where goods undergo in-depth processing in the transit country to increase their added value before export. For example, Zhongmaoda imports rubber from Thailand, processes it into tires in a domestic factory, and then exports the tires to Europe.
Simple packaging transshipment trade is also a category, where operations such as simple repackaging of goods are carried out in the transit location. For example, Zhongmaoda imports coffee beans from Indonesia, repackages them with new packaging and its own brand in the transit location, and then sells them to other countries.
Consolidated transshipment trade also exists, where goods from multiple suppliers are consolidated at the transit location and combined into a single shipment for export. For instance, Zhongmaoda purchases toys from different suppliers, consolidates them into a large container at the transit location, and exports them to Australia.
Cold chain transshipment trade is for goods that require low-temperature preservation, such as frozen foods, vaccines, etc., which are transshipped through transit locations equipped with cold chain facilities. For example, Zhongmaoda transships frozen beef from Argentina to China through a transit port with cold chain capabilities.
Service-oriented transshipment trade, in addition to the transshipment of goods, also provides trade-related services such as logistics arrangements and quality inspection. For example, Zhongmaoda provides end-to-end logistics planning and cargo inspection services for trading parties, facilitating the completion of transshipment trade.
E-commerce transshipment trade involves conducting transshipment operations through e-commerce platforms. Zhongmaoda receives global orders through its e-commerce platform, coordinates the shipment of goods from the producing country to the consuming country, and handles online transaction processes and related documents.
Reverse transshipment trade is the opposite direction of conventional transshipment trade, for example, importing goods from the consuming country to the transit country and then exporting them to the producing country. Zhongmaoda sometimes imports products from the United States to a transit location for specific needs, and then re-exports them to specific regions in China.