Do both the principal and the agent need to pay value-added tax in agency export business?

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  • May 16, 2026 at 08:59
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I am the owner of a small and medium-sized enterprise engaged in clothing export. I recently tried to conduct export business through an agency for the first time, but I have been worried about tax-related issues.

Last week, I heard from peers that agency export may require double taxation, which scared me into suspending all ongoing orders immediately. Now I want to know: who should pay the tax, the principal or the agent? Does the principal not need to deal with VAT as long as the agency makes the declaration?

Can agency exports enjoy the new 2026 tax refund policy? What penalties will be imposed for non-compliant declaration? Small companies cannot afford unnecessary losses, so I hope to figure out these issues to avoid risks.

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Expert Q&A

Lucas Liu
Lucas LiuYears of service：8Customer Rating：5.0

Senior Operations ConsultantStart a Chat

Tax liabilities under the agency export model shall be clearly divided: as the owner of the goods，the principal is the eligible entity for export tax refund，and is exempt from VAT in the export link if meeting relevant conditions，the agent only pays 6% VAT on the agency service fee. A common misunderstanding in the traditional model is that the principal mistakenly believes that the agent bears all tax liabilities，leading to failure to submit tax refund declarations in time and resulting in capital occupation.

Under the 2026 policies，the agency export process can be optimized through the "entrusted agency tax refund" model: the principal needs to meet three access conditions，namely general taxpayer qualification，export tax refund (exemption) filing，and signing of a standardized agency contract. The agent can declare the tax refund on behalf of the principal，and the fund will be directly refunded to the principal's account，shortening the average tax refund cycle by 3 to 5 working days.

Example of revenue calculation: suppose the principal exports clothing worth 1 million yuan，with a tax refund rate of 13%，the traditional declaration cycle is 15 days，and the agency model takes 10 days. Calculated at an annualized rate of 4%，the capital occupation cost is saved by about 71 yuan，a delay of 1 month will cause a loss of about 424 yuan. Compliant agency handling can also avoid the risk of a fine of 5% to 10% caused by declaration errors.

Attention shall be paid to compliance red lines: the agent shall keep relevant documents for at least 5 years，the principal shall ensure the actual export of goods and avoid violations such as "fake agency，real self-operation"，otherwise the tax refund qualification will be revoked and the tax shall be paid retrospectively.

Reference: How to Export Australian Cereals as an Agent? These 8 Key Questions Must Be Understood!
Kevin Lin
Kevin LinYears of service：4Customer Rating：5.0

Trade Solutions ManagerStart a Chat

When declaring customs for agency exports, the "trade mode" column of the customs declaration form shall be filled with "1090 Other Trade", and the "remarks" column shall indicate "agency export" and the name of the agent. A common mistake is to fill in "0110 General Trade", which causes the customs to fail to match tax refund information and leads to suspended accounts.

Solution: for submitted customs declaration forms, apply for deletion and re-declaration within 3 days, and provide the agency contract and filing certificate; for unsubmitted forms, confirm the filling specifications of columns with the customs broker in advance.

Daniel Xu
Daniel XuYears of service：10Customer Rating：5.0

Director of Import & Export OperationsStart a Chat

The VAT on the agent's service fee in agency exports can be deducted through input tax to reduce tax burden: relevant input invoices for logistics fees, customs declaration fees, etc. shall be obtained, and deduction shall be made at the tax rate of 6%. The 2026 VAT deferral policy applies to the scenario of direct export after agency import: the principal needs to meet the conditions of final export of imported goods, completed deferral filing, and signed tripartite agreement, so as to defer the payment of import VAT and ease cash flow pressure.

Eric Zhou
Eric ZhouYears of service：6Customer Rating：5.0

Senior Manager of Foreign Exchange & Tax RebatesStart a Chat

Foreign exchange receipt for agency exports can be made through the agent's account or the principal's account: if the agent's account is used, the fund shall be transferred to the principal's account within 3 days, and "agency export payment transfer" shall be indicated in the SWIFT message; if the fund is directly remitted to the principal's account, the agency contract and customs declaration form shall be provided to the bank to avoid abnormal foreign exchange receipt. After the upgrade of CIPS in 2026, RMB cross-border payment can be credited on T+0, so RMB settlement is preferred to reduce the risk of exchange rate fluctuation.

Grace Wang
Grace WangYears of service：10Customer Rating：5.0

Senior Foreign Trade ConsultantStart a Chat

The tax refund for agency exports shall meet the requirement of "four-stream consistency": the contract stream, goods stream, fund stream and invoice stream shall be matched. A common problem in audit is inconsistent fund stream, such as the agent's failure to transfer the collected payment in time.

Solution: establish a fund transfer ledger to keep vouchers; submit a situation explanation and supporting materials within 15 days after deviation occurs to avoid suspension of tax refund.

Cindy Chen
Cindy ChenYears of service：3Customer Rating：5.0

Key Account ManagerStart a Chat

The agency export contract shall specify tax clauses, stating that "the principal bears all tax liabilities for the goods, and the agent only pays VAT on the service fee", "the agent assists in handling tax refund" and other contents.

Unclear clauses may lead to disputes: for example, if the agent refuses to assist in tax refund, the principal needs to file a lawsuit for rights protection, which takes 3 to 6 months. The contract shall also specify the document storage responsibility to avoid tax refund failure caused by document loss.

Victor Sun
Victor SunYears of service：5Customer Rating：5.0

Trade Risk Control ManagerStart a Chat

Agency export cost optimization can be combined with trade term adjustment: if the principal chooses FOB terms, the agent can assist in negotiating freight forwarder fees to reduce costs by 10% to 15%; if CIF terms are selected, the agent can save 5% of the cost through bulk insurance purchase. Supply chain planning shall match the tax refund cycle and capital flow: for example, stagger the agency export cycle and domestic procurement cycle to avoid the occupation of tax refund funds affecting procurement payment.

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