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What are the core points and precautions for full-process compliant operation of entrepot trade in China?
or complex compliance issues.
clearance and fund security.
I am the person in charge of a hardware products export enterprise in Shanghai, with 10 years of export business experience to the EU. Last week, I just received the notice that the EU imposes an additional 45% anti-dumping duty on our main products, which directly erodes our already meager profits, and we even have to sell inventory at a loss.
I heard from peers before that we can avoid this barrier through entrepot trade, but I have never been exposed to such operations. I found a small agent last week, who guaranteed that they can handle it, but I am afraid they are unprofessional. In case of omission in document review leading to cargo detention and port congestion, or improper process connection triggering compliance risks, I will lose both money and goods.
In addition, I am also worried that the cost of entrepot trade will be too high to eat up the only remaining profits, and I am also afraid of stepping on the compliance red line and being identified as illegal operation. I am so anxious that I work overtime every day to check information, and I want to ask how to carry out entrepot trade in China reliably?
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
First of all，it is necessary to complete the refined review of pre-documents，focusing on verifying the authenticity of the third-party notarial documents of certificate of origin of entrepot goods，storage agreements in the transit country，and bill of lading endorsement，to ensure that the document information is fully matched，and avoid customs valuation or inspection triggered by inconsistent documents. At the same time，it is necessary to review the access requirements of the importing country in advance，confirm whether the packaging and labeling of goods in the transit country meet the standards of the importing country，so as to avoid customs clearance risks from the source.
Seamless connection shall be realized at core nodes: after the goods arrive at the port，the container replacement operation shall be directly completed by the cooperative bonded warehouse in the transit country，and the goods shall not enter the domestic market throughout the process to avoid import tariffs. At the same time，cross-border receipt and payment of foreign exchange shall be completed through the CIPS system to ensure that the capital flow is completely consistent with the cargo right flow and document flow，so as to avoid foreign exchange compliance risks. In addition，a clear cargo right control agreement shall be signed with the transit logistics service provider，agreeing that all operations shall be subject to our written confirmation to prevent loss of control of cargo right.
Targeted exception plans shall be preset: if the customs of the transit country triggers inspection，documents such as transit storage certificates and entrepot trade contracts shall be prepared in advance，and professional agents shall assist in communication. If the importing country proposes origin verification，documents such as third-party notarized certificate of origin and transit container replacement records shall be provided to prove that the goods are only for transit.
For the final compliant implementation，all documents shall be retained for at least 5 years，including customs declaration forms，bills of lading，foreign exchange receipt and payment vouchers，storage agreements，etc。for inspection by customs or tax authorities，to ensure that the entire entrepot trade process fully complies with China's foreign exchange administration and customs supervision requirements.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
When declaring customs for entrepot trade, it is necessary to strictly follow the "direct transit" operation specification, and the goods shall not be stored in storage places outside the domestic bonded zone, otherwise it will be identified as general import trade, and import tariffs and value-added tax shall be paid.
When declaring customs, documents such as the storage agreement of the transit country, entrepot trade contract, and third-party notarized certificate of origin shall be submitted to ensure that the "trade mode" column on the customs declaration form is accurately filled in as "entrepot trade", so as to avoid customs valuation disputes caused by incorrect declaration. If the customs raises a valuation query, documents such as cargo loading and unloading records of the transit country and storage fee vouchers shall be provided in time to prove the transit attribute of the goods, and avoid being required to pay supplementary tax or detain the goods.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
The logistics path of entrepot trade shall choose the "direct transit" mode to avoid excessive stay time of goods in the transit country leading to demurrage charges. The container replacement operation shall be completed in the bonded warehouse of the transit country, and professional loading supervision personnel shall be present throughout the process to ensure the authenticity of the container seal and avoid the goods being replaced or damaged. The bill of lading shall be "order bill of lading" and completed with blank endorsement to ensure the flexible transfer of cargo right.
At the same time, a clear cargo right control agreement shall be signed with the logistics service provider of the transit country, agreeing that the loading and unloading, storage, container replacement and other operations of the goods shall be subject to our written confirmation to avoid loss of control of cargo right. In addition, it is necessary to confirm the free storage period of the transit country in advance, arrange the container replacement time reasonably, and reduce additional storage costs.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
The tax treatment of entrepot trade shall strictly distinguish between "domestic entrepot" and "overseas entrepot". The income from overseas entrepot trade is not subject to value-added tax, and only enterprise income tax shall be declared in accordance with regulations. If the domestic bonded zone entrepot mode is adopted, it is necessary to ensure that the goods are under bonded supervision throughout the process, so as to avoid the value-added tax obligation caused by the goods entering the domestic market.
At the same time, the preferential tax policies of the transit country can be used, for example, some countries exempt value-added tax on storage fees and loading and unloading fees for entrepot trade, and the overall tax cost can be reduced by reasonably planning the logistics nodes of the transit country. In addition, attention should be paid to the rationality of related party transaction pricing to avoid anti-tax avoidance investigation by tax authorities caused by abnormal transfer pricing.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
The receipt and payment of foreign exchange for entrepot trade shall be completed through the CIPS system to ensure that the capital flow is completely consistent with the cargo right flow and document flow. When receiving and paying foreign exchange, documents such as entrepot trade contract, bill of lading, storage agreement shall be submitted to prove the authenticity of the transaction, so as to avoid being identified as illegal receipt and payment of foreign exchange by the foreign exchange administration department.
If an offshore account is used for foreign exchange receipt and payment, it is necessary to ensure that all capital transactions of the offshore account are supported by corresponding entrepot trade documents to avoid the account being frozen. At the same time, pay attention to the foreign exchange control policy of the transit country, confirm the currency exchange process of the transit country in advance, and avoid the failure of timely arrival of funds caused by foreign exchange control.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
The entrepot trade contract shall clearly stipulate the rights and obligations of all parties, especially the time node of cargo right transfer, the operation responsibility of the transit country, the force majeure fallback clause and other contents. It is necessary to avoid using illegal clauses such as "forgery of certificate of origin" to ensure that the content of the contract fully complies with the laws and regulations of China and the transit country.
At the same time, the logistics service provider of the transit country shall be required to provide a bank guarantee, and if the goods are detained or damaged due to the other party's operation errors, compensation can be obtained through the guarantee. In addition, it is necessary to conduct qualification verification on the third-party notary institution issuing the certificate of origin in the transit country to ensure that the legal effect of the notarial documents is recognized by the importing country.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
If the entrepot goods are inspected in the transit country or the importing country, documents such as the storage certificate of the transit country, entrepot trade contract, and third-party notarized certificate of origin shall be prepared in advance, and professional inspection assistance personnel shall be present for communication. During inspection, pay attention to the integrity of the container seal.
If the seal is damaged, immediately require the inspection personnel to issue a seal damage record, and replace the new seal simultaneously to avoid being identified as cargo replacement. If the importing country requires sampling and testing, the testing institution shall be required to issue an official testing report, and ensure that the content of the report is consistent with the information of the certificate of origin, so as to avoid return or cargo detention caused by inconsistent test results.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
Entrepot trade is not within the scope of export tax rebate, so it is necessary to avoid mixing the income of entrepot trade into the export tax rebate declaration data, otherwise it will trigger tax letter investigation, and even be identified as tax fraud.
The income and cost of entrepot trade shall be accounted for separately, and all relevant documents shall be retained for at least 5 years, including customs declaration forms, bills of lading, foreign exchange receipt and payment vouchers, storage agreements, etc., for inspection by the tax authorities. If the enterprise carries out general export trade and entrepot trade at the same time, a strict document separation management system shall be established to avoid the confusion of documents of the two types of business and trigger tax rebate compliance risks.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
The supply chain structure of entrepot trade shall adopt the "centralized control of core nodes" mode, select 1-2 mature transit countries as fixed transit nodes, such as Singapore, Malaysia, etc., and reduce logistics costs through long-term cooperation. At the same time, an inventory linkage strategy shall be established to store some goods in the bonded warehouse of the transit country in advance, shorten the time of entrepot operation and improve the response speed.
In addition, trade terms shall be flexibly converted. FOB terms are recommended for entrepot trade, and the importer is responsible for the transportation and insurance of the goods, so as to reduce our logistics risks and costs. At the same time, regularly evaluate the policy risks of the transit country, adjust the transit nodes in time, and avoid supply chain interruption caused by policy changes in the transit country.