Connect & Solve
Trade Q&A
Can domestic self-operated export enterprises apply for export tax refund for goods shipped to the Hong Kong Special Administrative Region?
or complex compliance issues.
clearance and fund security.
I am the foreign trade director of an outdoor camping equipment factory in Hangzhou. This is the first time we have received a bulk order from a local Hong Kong client, with a total value of nearly 800,000 RMB, and we will arrange shipment via China-Hong Kong cross-border trucks next week. We have been handling export tax refunds for European and American routes before, and have no experience with the Hong Kong route at all.
Yesterday, the freight forwarder told me that a peer failed to get the tax refund, even received a correspondence audit from the tax authority and had their tax refund account frozen for half a year, because they mistakenly considered trade with Hong Kong as domestic trade and did not go through formal customs declaration. I was so anxious that I looked up relevant materials until early morning yesterday, and got more confused the more I read -- some say Hong Kong is a free trade port so tax refund is not applicable, while others say tax refund is available if conditions are met.
Now I have stacks of customs declaration forms, packing lists and factory VAT invoices in hand, and I am afraid that any wrong step will not only make me lose the 13% tax refund, but also cause tax troubles. Could you please clearly explain whether we can get the tax refund, and what pitfalls we should avoid?
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
Many enterprises have two core misunderstandings: first，they mistakenly believe that Hong Kong falls into the scope of domestic trade and tax refund is not applicable，second，they think that any China-Hong Kong logistics service can meet the requirements for tax refund.
If these two misunderstandings lead to wrong operations，a chain of negative reactions will be triggered: first，goods that do not go through formal customs declaration will be recognized as domestic trade allocation by the tax authority，and the tax refund eligibility will be directly lost，if the documents are inconsistent with the actual logistics，it will also trigger a tax authority correspondence audit，freeze the enterprise's tax refund account，even affect the tax refund permission for all subsequent export businesses，and in serious cases，the enterprise will be included in the tax abnormal list.
Risk isolation measures shall be taken from two aspects: first，choose China-Hong Kong transportation channels under customs supervision to ensure that formal export declaration forms and transportation documents are obtained，second，complete four-stream consistency verification of documents in advance，that is，the goods value，product name and buyer information on the contract，invoice，customs declaration form and foreign exchange receipt certificate are completely matched.
Exclusive loss reduction tip: You can entrust a professional agency to complete pre-declaration verification with the tax authority in advance. If any document defect is found，you can correct it within 3 working days before shipment to avoid missing the tax refund due to minor problems.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
When declaring goods exported to Hong Kong for customs, you shall select the actual exit customs (such as Shenzhen Bay, Huanggang, etc.) in the "export port" column of the customs declaration form, and fill in "Hong Kong, China" in the "country/region of destination" column. Filling in "within China" is strictly prohibited.
If you choose the domestic transit mode but fail to complete the exit declaration, the goods will be recognized as domestic allocated goods by the customs, and no valid export tax refund declaration form can be generated. In addition, the "transaction method" on the customs declaration form shall be consistent with the contract.
If FOB terms are adopted, the split amounts of freight and insurance premium shall be clearly indicated to avoid customs valuation disputes leading to return of the declaration form, which affects the acquisition of tax refund vouchers. If the data on the customs declaration form is inconsistent with the VAT invoice, you shall apply for modification within 10 working days after the customs declaration form is issued, otherwise the tax refund process cannot be initiated after the deadline.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
Goods exported to Hong Kong for tax refund must be transported by China-Hong Kong transportation enterprises with customs supervision qualification, using "customs supervised vehicles". Ordinary China-Hong Kong express delivery or unregistered freight vehicles are strictly prohibited.
During transportation, you need to obtain the "China-Hong Kong Transportation Customs Clearance Form" and "Customs Supervised Goods Transportation Record", which are the core logistics vouchers for tax refund. In addition, pay attention to the loading and unloading location of goods.
If you unpack and transship goods in non-bonded areas within Hong Kong, you shall report the relevant information of entrepot trade to the domestic tax authority in advance to avoid being recognized as domestic trade goods. In case of logistics abnormalities such as container rollover and port detention, you shall obtain the official abnormality certificate issued by the logistics enterprise within 24 hours, and submit it to the tax authority simultaneously to apply for extension of the tax refund process, so as to prevent the tax refund eligibility from becoming invalid due to overdue.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
If the goods exported to Hong Kong are ultimately used for transshipment to a third country, you shall apply for "entrepot trade tax refund filing" with the tax authority before export, clarify the final flow of the goods, to avoid being recognized as directly sold to Hong Kong and affecting the tax refund. If the Hong Kong buyer is an affiliated company of the enterprise, you shall ensure that the transaction pricing conforms to the arm's length principle, that is, the price deviation from the contemporaneous non-affiliated transaction price does not exceed 10%, otherwise it will be recognized as affiliated transaction for profit transfer by the tax authority, the tax refund eligibility will be cancelled and the tax shall be paid retroactively.
In addition, if RMB settlement is adopted, you shall ensure that the foreign exchange receipt account is a formal bank account in Hong Kong, and the transaction remark on the foreign exchange receipt certificate shall clearly indicate "payment for exported goods", to avoid failure of tax refund review due to ambiguous nature of foreign exchange receipt.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
The foreign exchange collection operation for exports to Hong Kong shall strictly comply with the compliance requirements for cross-border receipt and payment of foreign exchange. The foreign exchange must be transferred from the corporate account of the Hong Kong buyer. Private accounts or offshore accounts are strictly prohibited for foreign exchange collection, otherwise it will be recognized as abnormal foreign exchange receipt by the State Administration of Foreign Exchange, which affects the capital flow verification for tax refund.
The foreign exchange shall be collected within 180 days after the goods are exported. If the foreign exchange cannot be collected on time due to special circumstances, you shall apply for foreign exchange collection extension filing with the tax authority 30 days before the expiration, and submit the payment extension certificate from the Hong Kong buyer. In addition, if L/C settlement is adopted, you shall ensure that the L/C clause clearly indicates "goods are exported to Hong Kong, China", and the beneficiary and goods value of the L/C are consistent with the customs declaration form and VAT invoice, to avoid failure of foreign exchange collection due to soft clauses of the L/C, which further affects the tax refund eligibility.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
The trade contract for exports to Hong Kong shall clearly indicate the nature of "export trade", adopt international trade terms under INCOTERMS 2020 (such as FOB Shenzhen Bay, CIF Hong Kong). Expressions such as "domestic allocation" and "domestic distribution" are strictly prohibited, otherwise it will be recognized as a domestic trade contract by the tax authority, and the tax refund process cannot be initiated. The contract shall clearly specify the Hong Kong registered address and corporate account information of the buyer, as well as details such as the name, specification, value and delivery time of the goods, to ensure that the information is completely consistent with that on the customs declaration form and VAT invoice.
If the contract involves entrepot trade, the final flow of the goods and the transshipment obligation of the Hong Kong buyer shall be specified in the additional clauses, to avoid the tax authority questioning the authenticity of the transaction due to ambiguous contract terms and triggering a correspondence audit. In addition, you shall keep the original and electronic versions of the contract for at least 5 years for random inspection by the tax authority.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
If goods exported to Hong Kong are inspected on site by the customs, you shall prepare complete document materials in advance, including contracts, VAT invoices, packing lists, customs declaration forms, as well as brand authorization documents of the goods (if brands are involved). During the inspection, you shall cooperate with customs officers to check whether the name, specification and quantity of the goods are consistent with the customs declaration form. Mismatch between goods and declaration is strictly prohibited, otherwise it will be recognized as false declaration, the tax refund eligibility will be cancelled and you will face fines.
If the goods are subject to commodity inspection, you shall obtain the "Exit Goods Clearance Form" in advance and submit it simultaneously during customs declaration, to avoid port detention of goods due to unqualified commodity inspection, which affects the time node of tax refund. In addition, if the customs requires sample testing, you shall obtain the test report within 10 working days and submit it to the tax authority to ensure the smooth progress of the tax refund process.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
If the goods exported to Hong Kong are dangerous goods (such as gas tanks and lithium batteries for camping), you shall use dangerous goods packaging conforming to UN standards, and obtain the "Dangerous Goods Packaging Performance Inspection Result Sheet" and "Dangerous Goods Use Appraisal Result Sheet", which are necessary documents for customs declaration and tax refund. If the packaging does not meet the standards, the customs will refuse the declaration, resulting in the failure of the goods to exit the country, and thus the tax refund process cannot be initiated.
In addition, the packaging of ordinary goods shall clearly indicate the name, quantity, gross weight, net weight of the goods, as well as the words "exported to Hong Kong", to avoid the customs misjudging them as domestic trade goods due to ambiguous packaging labels. If the goods require moisture-proof and shock-proof packaging, the packaging scheme shall be clearly indicated in the packing list to ensure consistency with the "packaging type" column of the customs declaration form, so as to avoid document inconsistency affecting the tax refund review.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
The tax refund application for goods exported to Hong Kong shall be submitted to the tax authority within 90 days after the goods are exported, and no application can be made after the deadline. The submitted documents shall include the export customs declaration form (tax refund copy), special VAT invoice (deduction copy), foreign exchange receipt certificate and transportation documents, and the information of all documents shall be consistent, that is, four-stream consistency.
If the tax authority initiates a correspondence audit, you shall submit the supporting materials for transaction authenticity within 15 working days, including the original contract, goods delivery note, logistics track record, buyer's payment certificate, etc., otherwise it will be recognized as false transaction and the tax refund eligibility will be cancelled. In addition, you shall establish a special tax refund document archive, organize and keep all documents by export batches for at least 5 years. The tax authority will randomly check the archive from time to time, and if the archive is missing or inconsistent, the enterprise's tax refund permission will be suspended.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
If an enterprise has long-term export orders to Hong Kong, it can plan the supply chain mode of "Hong Kong bonded warehouse transshipment", that is, the goods are first exported to the Hong Kong bonded warehouse, and then distributed according to the needs of the Hong Kong buyer. This mode can not only enjoy the export tax refund policy, but also reduce logistics costs. During planning, you shall ensure that the operator of the bonded warehouse has formal bonded qualification, and the inbound and outbound records of the goods shall be submitted to the domestic tax authority simultaneously, to avoid being recognized as domestic trade allocation.
In addition, you can combine export orders to Hong Kong with other cross-border orders for planning, share logistics and document resources, and reduce the operation cost of tax refund. If entrepot trade is involved, you shall plan the transshipment route in advance, clarify the final flow of the goods, and ensure that the entrepot filing information is consistent with the actual flow, so as to avoid affecting the tax refund application due to inconsistent information.