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How to issue supporting documents for the entire transit trade chain in compliance to avoid customs detention risk?
or complex compliance issues.
clearance and fund security.
I am the head of a foreign trade enterprise in Shanghai specializing in the export of mechanical and electrical products. Last month, we handled a machine tool order that was transited from China to Malaysia and then to the EU. Due to the negligence of the HS code marking details on the third-party certificate of origin when issuing transit documents, the goods were detained at Port Klang, Malaysia for 3 days.
We not only paid more than 20,000 yuan in port detention fees, but also compensated 50,000 yuan in liquidated damages to the customer. Now we have another order of the same type of high-tariff machine tools to be transited to the United States.
I am really afraid of making mistakes again, and worry about whether the goods can be shipped smoothly every day. I would like to ask how to issue transit trade documents, especially the details involving high-tariff goods categories and special requirements of transit ports, and how to make quick remedies in case of deviations in document issuance.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
First of all，pre-audit details of documents shall be well handled. For transit trade of high-tariff mechanical and electrical products，it is necessary to focus on verifying the consistency between the HS code on the third-party transit country certificate of origin and the goods nameplate，to ensure that the product name，specifications and HS code on the certificate of origin fully match those on the bill of lading and commercial invoice. Meanwhile，the qualification of the certificate of origin issuing authority recognized by the transit country customs shall be confirmed to avoid invalidation of documents due to non-compliant authorities.
For the connection of core nodes，cross-verification of all transit trade documents shall be completed 72 hours before the goods are shipped，and the document specialist，logistics specialist and overseas agent shall confirm synchronously to ensure that the "transshipment clause" on the bill of lading is clearly marked，with the transit country，transit port and final port of destination clearly indicated，so as to avoid the expression of "directly shipped to the destination country". Meanwhile，the commercial invoice shall be clearly marked with the words "transit trade"，forming a logical closed loop with the transit process stated on the certificate of origin.
For abnormal response plans，the emergency correction channel of the transit country agent shall be reserved in advance. If deviations in document issuance are found，the agent shall submit a document correction explanation letter to the transit country customs as soon as possible，and replace the correct documents synchronously to avoid customs detention after the goods arrive at the port. If port detention has occurred，it is necessary to immediately apply for the "green channel for document review" of the transit country，and the agent shall assist in providing trade background certification materials such as procurement contracts and transit agreements to speed up the customs review process.
At the final compliance implementation stage，all transit trade documents (including certificate of origin，bill of lading，invoice，transit agreement，and photos of goods nameplates) shall be kept and filed for more than 5 years，and uploaded to the customs compliance management system synchronously，to ensure that complete vouchers can be provided quickly during subsequent tax verification or customs traceback，so as to realize compliance implementation of the whole process.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
When issuing transit trade documents, attention shall be paid to the marking of the "trade mode" column on the customs declaration form. The corresponding code of "transit trade" must be clearly checked, and the information of transit country, transit port and final destination country shall be indicated in the "remarks column" to avoid customs valuation doubts caused by vague marking of trade mode.
For high-tariff goods categories, additional supporting documents such as transit country warehousing agreements and transit operation certificates shall be provided to prove that the goods are only stored and transshipped in the transit country without processing or value-added operations, so as to support the compliance of transit trade. In addition, it is necessary to ensure that the HS code on the customs declaration form is completely consistent with that on the certificate of origin and bill of lading. If there is a code difference, an HS code classification explanation shall be submitted to the customs in advance to avoid document deletion and re-declaration or customs detention caused by inconsistent classification.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
When issuing the bill of lading for transit trade, it shall be clearly marked as "Through B/L" or "Transshipment B/L", and direct bill of lading is prohibited. Meanwhile, the words "Transit Cargo" shall be indicated in the "goods description" column of the bill of lading to avoid the destination port customs misjudging the goods as directly imported goods. In addition, it is necessary to coordinate with the transit country logistics agent to issue the transit warehouse receipt in advance.
The goods information on the warehouse receipt shall fully match that on the bill of lading and certificate of origin, as a voucher for the storage and transshipment of goods in the transit country. In case of abnormal situations such as container rollover and port change, the bill of lading information shall be updated as soon as possible, and the transit country customs and destination port customers shall be notified synchronously to avoid port detention or customs clearance failure caused by delayed document information.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
When issuing commercial invoices for transit trade, the profit of the transit link and the cost of goods shall be clearly distinguished. It is prohibited to include transit profit into the cost of goods to avoid triggering tax verification in the transit country or destination country. If VAT deferral operation is involved, the words "VAT Deferral Applicable" shall be marked on the invoice, and the VAT deferral filing voucher of the transit country shall be provided synchronously to ensure compliant deferral of value-added tax in the transit link.
In addition, the capital flow vouchers of transit trade shall be kept to ensure that the capital flow is consistent with the document flow, so as to avoid being identified as false trade due to abnormal capital flow and triggering tax inspection risks. For transit trade involving related party transactions, it is necessary to ensure that the invoice price conforms to the arm's length principle, so as to avoid tax adjustment caused by unreasonable transfer pricing.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
For document issuance in the collection and payment link of transit trade, it is necessary to ensure that the transaction code of the SWIFT message is consistent with the trade mode. The transaction code shall be the one corresponding to "transit trade", and the information of transit country, transit port and goods shall be indicated in the message postscript to avoid the interception of collection and payment due to inconsistent transaction codes.
In addition, a full set of transit trade documents (including bill of lading, certificate of origin, commercial invoice, and transit agreement) shall be submitted to the bank in advance as the compliance basis for collection and payment. The bank will verify the authenticity and consistency of the documents, and will suspend the collection and payment operation if logical loopholes are found in the documents. For transit trade using the CIPS system for RMB cross-border payment, it is necessary to ensure that the document information fully matches the information in the CIPS message to avoid payment failure due to inconsistent information.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
The transit agreement for transit trade shall be issued as one of the core documents. The agreement shall clearly stipulate the rights and obligations of the transit country agent, including goods storage, transshipment, document issuance, etc., and at the same time stipulate the liability for breach of contract, so as to avoid abnormal document issuance caused by the agent's operation errors.
If L/C settlement is involved, it shall be clearly required in the L/C that the beneficiary shall issue a full set of transit trade documents (including certificate of origin, bill of lading, commercial invoice, and transit agreement), and soft clauses such as "transshipment prohibited" shall be prohibited to avoid payment refusal due to non-conformity with L/C terms. In addition, the authenticity of documents such as certificate of origin and bill of lading shall be verified. The authenticity of the certificate of origin can be queried through the verification system of the official agency of the transit country, so as to avoid legal risks caused by the use of forged documents.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
When transit trade goods are inspected at the transit port, a full set of transit documents shall be provided for inspection. Among them, the certificate of origin, bill of lading and commercial invoice are the core inspection vouchers, and it is necessary to ensure that the document information is completely consistent with the actual situation of the goods, including the name, specification, quantity, packaging, etc. If it is found that the documents are inconsistent with the goods during on-site inspection, a letter of explanation on the goods situation shall be submitted to the customs immediately, and supporting documents such as the procurement contract of the goods and the original factory certificate shall be provided at the same time to prove the authenticity of the goods information, so as to avoid customs detention caused by inconsistent documents.
In addition, it is necessary to ensure that the shipping mark on the goods packaging is completely consistent with the shipping mark on the documents, and the shipping mark shall be marked with the information of the transit country and the final destination country, so as to avoid customs suspicion caused by inconsistent shipping marks. If devanning inspection is required, the transit country agent shall be coordinated in advance to be present for cooperation to speed up the inspection process.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
When issuing transit trade documents, it is necessary to ensure the "consistency of four flows", that is, the capital flow, document flow, goods flow and contract flow are fully matched, so as to avoid the failure of export tax rebate review due to inconsistent flows. If an enterprise carries out transit trade and general trade at the same time, the documents of the two types of trade shall be filed separately to avoid abnormal tax rebate verification caused by mixing.
In addition, all original documents of transit trade shall be kept, including bill of lading, certificate of origin, commercial invoice, transit agreement, capital flow voucher, etc., and the retention period shall meet the requirements of the tax authority, usually more than 5 years. If the tax authority conducts correspondence investigation, a full set of transit documents and trade background certification materials shall be provided within the specified time to prove the authenticity and compliance of transit trade, so as to avoid tax rebate suspension or recovery due to failure of correspondence investigation.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
The issuance of transit trade documents shall match the supply chain planning. If the supply chain mode of "multi-country transit" is adopted, corresponding transit documents shall be issued for each transit country, including certificate of origin, warehouse receipt, transshipment certificate, etc., to ensure that the documents of each transit link form a complete logical closed loop. In addition, the document issuance process shall be optimized according to the supply chain cost actuarial model, for example, selecting electronic document issuing institutions recognized by the transit country to reduce the transmission time and cost of paper documents, and improve the efficiency of document issuance.
For transit trade involving inventory linkage, it is necessary to ensure that the quantity of goods on the documents is completely consistent with the inventory ledger, so as to avoid supply chain interruption caused by inconsistent quantity. In addition, the details of document issuance shall be adjusted according to the customs requirements of different destination countries. For example, some countries require consular certification of the certificate of origin, so the certification process shall be arranged in advance to avoid affecting the customs clearance of goods.