Connect & Solve
Trade Q&A
When carrying out import agency business, is it mandatory for the agency company to advance all kinds of taxes and fees in the import link?
or complex compliance issues.
clearance and fund security.
I am the owner of a small imported beauty retail business in Shanghai. Recently, I looked for an agent to import a batch of Japanese makeup for the first time. I contacted three foreign trade agency companies, two of which required that they must advance the tax before settling with me, claiming that this is the industry norm, while the other said that non-tax-advance is negotiable.
I am now very confused: on the one hand, my cash flow is not abundant, will tax advance increase my capital pressure in the later stage? On the other hand, I heard that there are industry traps in tax advance, will I encounter arbitrary price increases or cargo detention by the agent?
My friend once had a dispute over tax advance with an agent when importing skin care products, which led to the goods being detained at the port for 3 days and incurred thousands of yuan in port detention fees. Now I am afraid of falling into traps and want to reduce capital occupation at the same time, so I would like to ask whether tax advance is mandatory for import agencies, and how to avoid relevant risks?
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
First of all，we need to expose a common industry misunderstanding: many bad agencies will claim that "tax advance is the industry norm for import agencies" to bind customers and even raise prices in disguised forms，which is a typical misleading statement.
If you believe this misunderstanding and accept mandatory tax advance，it may trigger a chain of negative reactions: for example，the agency detains the cargo ownership on the grounds of taxes and fees. If the enterprise has temporary poor capital turnover and cannot settle in time，the agency may delay the release of goods，even lead to port detention and customs seizure of goods，resulting in additional costs such as port detention fees and warehouse rental fees，and in severe cases，it will also affect the customs credit rating of the enterprise.
Physical risk isolation measures: Before signing the agency agreement，make it clear that tax advance is not a mandatory requirement. You can choose the "reimbursement for actual expenses" mode according to your own capital situation，that is，the enterprise transfers taxes and fees to the designated account in advance，and the agency is only responsible for paying on behalf of the enterprise.
Exclusive loss stop tips: If you choose the tax advance mode，you need to clarify tax and fee settlement nodes and cargo ownership release conditions in the agreement，and at the same time require the agency to provide the time limit for providing tax payment certificates to avoid the situation of "falsely increased taxes and fees".
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
The advance of import taxes and fees is directly related to the customs declaration process. If the agency advances the tax, it is necessary to ensure the accuracy of tax and fee calculation before customs declaration, so as to avoid tax adjustment caused by price review disputes, which will lead to disputes that the advanced tax amount is inconsistent with the actual tax and fee.
In the customs declaration link, the agency needs to submit accurate document materials to the customs in advance, including contracts, invoices, packing lists, etc. If the tax calculation is wrong due to inconsistent documents, the agency that advances the tax may pass on the additional costs to the principal. In addition, if the customs raises a query on price review, the agency shall communicate with the principal in time and provide relevant supporting materials, so as to avoid the increase of capital occupation of advanced tax caused by tax supplementary payment, which will affect the cooperation rhythm of both parties.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
Tax advance is closely related to cargo ownership control in import logistics. If the agency advances the tax, some agencies will temporarily detain the bill of lading or refuse to release the goods on the grounds of "unsettled taxes and fees". If there are additional costs such as warehouse rental fees and container detention fees after the goods arrive at the port, the agency may bundle these costs with the advanced tax amount for settlement.
To avoid such problems, the principal can require the agency to clearly inform the estimated taxes and fees before the goods arrive at the port, and at the same time agree to release the cargo ownership immediately after the taxes and fees are paid. If the non-tax-advance mode is selected, the principal shall transfer the taxes and fees to the designated account 1-2 days before the goods arrive at the port to ensure that the agency can pay them in time, so as to avoid port detention of goods caused by unpaid taxes and fees and additional logistics costs.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
From the perspective of taxation, import agency tax advance is not a mandatory requirement, and the principal can choose the mode according to their own tax planning needs. If the VAT deferral mode is adopted, the principal does not need to pay value-added tax in the import link, and can directly defer it to the sales link for declaration and payment. At this time, there is no need for the agency to advance the tax, which can effectively reduce the capital occupation cost.
If the tax advance mode is selected, it is necessary to clarify whether the interest cost of the advanced tax funds is included in the agency service fee, so as to avoid hidden charges. In addition, the principal shall require the agency to provide formal tax payment certificates to ensure that taxes and fees can be deducted normally, so as to avoid tax risks caused by non-compliant certificates.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
From the perspective of cross-border payment and receipt compliance, tax advance involves cross-border flow of funds and domestic settlement. If the agency advances the tax, it is necessary to ensure that the source and use of funds comply with foreign exchange management regulations, so as to avoid capital return or abnormal foreign exchange settlement.
The principal shall clarify the account information for tax and fee settlement with the agency to ensure that all capital flows are carried out through formal channels, and avoid settlement using private accounts. In addition, if the non-tax-advance mode is selected, the principal shall go through the foreign exchange purchase procedures in advance to ensure that taxes and fees are paid in full and on time, so as to avoid delay in tax payment caused by insufficient foreign exchange quota, which will affect the customs clearance of goods.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
When signing the import agency agreement, the tax advance clauses shall clarify the division of rights and responsibilities to avoid vague expressions. If the scope of tax advance, settlement nodes, interest costs and other contents are not clearly specified in the agreement, the principal may face difficulties in producing evidence once a dispute arises.
The principal can require the agreement to stipulate that "tax advance only refers to statutory taxes and fees such as customs duties, value-added tax and consumption tax in the import link, excluding additional costs such as logistics and warehousing", and at the same time clarify that the losses caused by the agency's failure to pay taxes and fees in time shall be borne by the agency. In addition, the conditions for the release of cargo ownership shall be stipulated in the agreement to prevent the agency from detaining the cargo ownership on the grounds of tax advance.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
If the agency advances the tax, if there is an abnormality in the on-site inspection link of the goods, such as the customs requiring supplementary tax payment or fine, the agency may include these additional costs into the advanced tax amount and pass them on to the principal. The principal shall understand the risk points of inspection before the goods arrive at the port, and prepare relevant supporting materials in advance.
If there is an inspection abnormality, it shall communicate with the agency in time to confirm the rationality of the additional costs, so as to avoid the agency falsely increasing the costs. In addition, if the non-tax-advance mode is selected, the principal shall pay the relevant fees in time after the inspection results are released, so as to avoid the goods being unable to be released due to unpaid fees and additional costs such as port detention fees.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
The tax advance for imported special goods (such as dangerous goods and cold chain goods) is closely related to the timeliness of the goods. If the agency fails to advance the tax in time, it may lead to the detention of the goods at the port and affect the quality of the goods. For example, the detention of cold chain goods at the port will lead to the interruption of the cold chain and the deterioration of the goods, resulting in huge losses.
The principal shall clarify the time limit for tax and fee payment of special goods with the agency, and require the agency to complete the tax and fee payment before the goods arrive at the port to ensure that the goods can be released in time. If the non-tax-advance mode is selected, the principal shall calculate the amount of taxes and fees in advance to ensure that the funds are in place in time, so as to avoid the detention of goods at the port caused by unpaid taxes and fees, which will affect the quality of the goods.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
From the perspective of supply chain planning, the tax advance mode will affect the capital turnover rate and inventory cost of enterprises. If the agency is selected to advance the tax, the capital occupation time of the enterprise will be extended, which may affect the subsequent procurement plan. The principal can choose the tax advance mode according to their own supply chain rhythm.
For example, if the enterprise has abundant cash flow, it can choose the non-tax-advance mode to reduce the hidden cost of agency service fee; if the enterprise has tight cash flow, it can choose the tax advance mode, but it needs to clarify the interest cost and settlement node of the tax advance. In addition, the principal can reduce the amount of taxes and fees for a single import by optimizing the supply chain structure, such as adopting the centralized procurement mode, so as to reduce the capital pressure of tax advance.