Connect & Solve
Trade Q&A
What core compliance requirements must domestic entrepot trade enterprises follow for income tax filing in 2026?
or complex compliance issues.
clearance and fund security.
I am the head of a Shanghai-based enterprise mainly engaged in entrepot trade with Southeast Asia. Last month, we completed three palm oil business transactions transferring goods from Malaysia to Mexico via entrepot trade, and all income was transferred from overseas offshore accounts to our domestic basic bank account. Last week, when our finance team was filing taxes, we suddenly received a tax risk warning from the tax authority, stating that the definition of our entrepot trade income was vague, and there might be non-compliant declarations, requiring us to submit relevant documents within 3 days.
I am extremely anxious and unable to eat properly, worried that we will be asked to pay back taxes, incur additional late payment fees, and even affect the enterprise's tax payment credit rating, which will impact our future cross-border trade operations. What are the latest requirements for filing taxes on entrepot trade income in 2026?
For this kind of entrepot trade income where goods never enter China, how exactly should we distinguish between domestic and overseas income? What documents need to be prepared in advance to ensure compliance? Also, what are the common tax filing mistakes in the industry? I don't want to fall into the same traps again.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
First，you need to complete the accurate pre-review of supporting documents，which is the core prerequisite for compliant tax filing. Focus on verifying the entrepot trade bill of lading (which must clearly indicate that goods are shipped directly from the port of origin to the port of destination and do not enter China)，payment vouchers (which must correspond to payment records for overseas suppliers，with full alignment between capital flow and cargo flow)，overseas purchase and sales contracts (which must clearly indicate the entrepot trade attribute to avoid being misjudged as general trade)，and ensure that there are no logical conflicts in dates，cargo quantities，and amounts across all documents.
At core nodes，you need to properly connect tax item recognition and income distinction: The 2026 new tax regulations clearly state that if entrepot trade income comes from goods that do not actually enter China and no value-added activities such as storage or processing occur in China throughout the process，it can be recognized as overseas income，and no value-added tax (VAT) needs to be paid，but corporate income tax must be declared in accordance with regulations. When filing taxes，you need to fill out the "Cross-border Trade Income Detailed Declaration Form"，mark the "entrepot trade" attribute，and upload scanned copies of corresponding documents simultaneously to ensure the tax system automatically identifies the compliant attribute.
For emergency response plans，if you receive a tax warning，you need to submit the "Entrepot Trade Business Explanation" within 3 working days，attached with supporting materials such as shipping company manifests and cargo GPS trajectory screenshots to prove that the goods did not enter China，if you are requested to conduct an on-site inspection，you need to organize all paper documents in advance and arrange a dedicated person to coordinate to ensure a smooth inspection process.
To achieve final compliance，you need to establish a monthly document archiving system，uniformly archive all documents related to entrepot trade for no less than 10 years，conduct internal self-inspection every quarter，and check the consistency of capital flow，cargo flow，and document flow to avoid subsequent risks caused by lost documents or inconsistent data.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
When filing taxes for entrepot trade, you need to ensure a logical closed loop in the customs declaration process. If goods involve domestic transit but do not actually enter China (such as transshipping at domestic ports), you need to declare the "transit goods" supervision mode during customs declaration and obtain the "Entrepot Trade Customs Declaration Form". This document is one of the core basis for the tax authority to recognize the entrepot trade attribute.
If you fail to declare in accordance with regulations, the tax authority may judge it as general trade income and require you to pay back VAT and additional taxes. In 2026, customs has realized real-time data sharing with the tax system, and customs declaration data must fully match tax filing data. If there are inconsistencies in cargo quantities or amounts, it will directly trigger a tax warning. In addition, if entrepot goods involve sensitive product categories, you need to additionally provide the "Entrepot Trade Filing Form" to avoid tax filing risks caused by misjudgment of supervision categories.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
The logistics trajectory of entrepot trade is a key basis for proving that goods did not enter China when filing taxes. In 2026, the tax authority has listed shipping company manifest data and satellite positioning trajectory as core verification materials. You need to choose a logistics service provider that provides traceable trajectories throughout the process to ensure that goods are shipped directly from the port of origin to the port of destination and do not enter terminal yards or bonded zones of domestic ports; if domestic transit is necessary, you need to choose a bonded logistics center with entrepot trade qualifications and obtain the corresponding transit certificate.
In addition, you need to keep the "Entrepot Cargo Transportation Confirmation" issued by the logistics service provider, which clearly indicates that the goods did not undergo loading, unloading, storage or other activities in China, to avoid being recognized as domestic income by the tax authority due to vague logistics trajectories. If abnormal situations such as temporary port changes occur, you need to update the tax declaration data within 24 hours and submit supplementary port change certification materials.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
In 2026, the corporate income tax declaration for entrepot trade income must follow the "income source determination rules". If core links such as contract signing, goods pricing, and capital settlement for entrepot trade are all completed overseas, it can be recognized as overseas income and enjoy the overseas income tax credit policy (if income tax has been paid overseas).
It should be noted that if an enterprise conducts pricing operations for entrepot trade through domestic affiliated companies, it must comply with the arm's length principle to avoid the tax authority adjusting the taxable income due to related party transaction transfer pricing. In addition, entrepot trade income does not need to pay VAT, but must conduct zero declaration in accordance with regulations.
If you fail to declare in time, it will be regarded as non-compliant tax filing and face a late payment fee of 0.05% per day. It is recommended that enterprises establish a cross-border income ledger, record the income, costs, and overseas tax payment status of entrepot trade every month to facilitate credit declaration during annual final settlement.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
Compliant receipt and payment of foreign exchange for entrepot trade is the foundation of tax filing. In 2026, the People's Bank of China (PBoC) has connected the receipt and payment data of entrepot trade with the tax system in real time.
If the amount of receipt and payment does not match the tax filing income amount, it will directly trigger a risk warning. You need to ensure that the payment recipient is an overseas supplier, the collection recipient is an overseas purchaser, and the receipt and payment time is consistent with the time agreed in the trade contract, to avoid situations such as "collection first, payment later" or "large receipt and payment without corresponding contract".
In addition, if you use offshore accounts for receipt and payment, you need to declare the income and expenditure details of the offshore account when filing taxes and provide the bank statement of the offshore account to avoid being recognized as hidden income by the tax authority due to undeclared offshore account funds. It should be noted that the supervision of offshore accounts has been strengthened in 2026, and enterprises need to regularly report the transaction status of offshore accounts to the PBoC to ensure that the receipt and payment data fully match the tax filing data.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The contract clauses for entrepot trade must clearly indicate the entrepot trade attribute to avoid being misjudged by the tax authority due to vague contract expressions. The contract must clearly agree that "goods are shipped directly from the port of origin to the port of destination and do not enter the territory of the buyer's (domestic enterprise) country", and also clearly specify the rights and obligations of both buyers and sellers, capital settlement methods, document delivery requirements and other contents to ensure that the contract clauses are consistent with cargo flow, capital flow, and document flow.
In addition, if entrepot trade involves a third-party logistics service provider, the logistics contract must clearly require the service provider to provide complete logistics trajectory proof to avoid being unable to obtain the certification materials required for tax filing due to unagreed logistics contract terms. It is recommended that enterprises conduct compliance reviews of entrepot trade contracts every year to avoid tax or legal risks caused by contract clause loopholes. If a contract dispute occurs, relevant evidence must be retained in time to ensure the authenticity and legality of tax filing data.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
Entrepot trade income does not fall within the scope of export tax refund, and must be strictly distinguished from export trade income to avoid illegal tax refund declaration caused by confusing income types. In 2026, the tax authority has conducted associated verification between export tax refund declaration data and entrepot trade tax filing data.
If an enterprise declares entrepot trade income as export tax refund income, it will be disqualified from export tax refund and required to return the refunded taxes. You need to establish an income classification ledger to separately record the income, costs, and document status of entrepot trade, general trade, and processing trade to ensure accurate income type when filing taxes.
In addition, it should be noted that the cost accounting for entrepot trade must match the income. If the cost accounting is vague, the tax authority may recognize it as inflated costs and require adjustment of the taxable income. It is recommended to conduct quarterly self-inspection of income types to avoid tax refund or tax filing risks caused by confusing income types.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
From the perspective of supply chain structure, the tax filing compliance of entrepot trade must match the supply chain path design. If domestic ports are chosen as transit nodes, the "bonded entrepot trade" mode must be adopted, and goods must be stored in bonded logistics centers to avoid domestic income recognition caused by actual entry of goods.
In 2026, the entrepot trade business of bonded logistics centers has realized data connection with the tax system. Enterprises need to declare the entrepot trade attribute when storing goods in the bonded logistics center and obtain the corresponding bonded warehouse certificate as supporting materials for tax filing. In addition, the supply chain path design needs to consider tax costs.
If the core profit link of entrepot trade is in China, corporate income tax must be declared as domestic income; if the core profit link is overseas, supporting materials for profit attribution to overseas must be provided to avoid tax risks caused by unclear profit attribution. It is recommended that enterprises optimize the supply chain path every year to ensure a balance between tax filing compliance of entrepot trade and cost optimization.