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What to Do for Compliant Remediation When Goods Ineligible for Export Tax Refund Are Wrongly Declared for Refund?
or complex compliance issues.
clearance and fund security.
I am an operator of a small foreign trade company in Shanghai. Last week, I received a pre-declaration early warning from the tax authority, stating that a batch of goods I declared for export tax refund last month did not meet the refund conditions.
This batch of goods are free samples we sent to overseas customers, which are not eligible for tax refund originally. I have only been in charge of tax refund work for less than half a year, and I made a mistake in the rush of quarterly declaration at that time, declaring it together with other refundable goods.
Now I am very worried: on the one hand, I am afraid of being fined by the tax authority and affecting the company's tax credit rating; on the other hand, I am worried that the tax refund review of subsequent normal export goods will be stuck, and even affect other foreign trade businesses of the company? I would like to ask how to deal with this situation, and is there any way to minimize the impact?
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
First of all，the immediate correction process shall be initiated immediately: submit the Application for Correction of Erroneous Declaration of Export Goods Tax Refund (Exemption) to the competent tax authority as soon as possible，and attach supporting materials at the same time，including the goods delivery order，customer confirmation letter，"sample" mark on the customs declaration form，etc。proactively explain the reason for the false declaration，and apply for revoking this tax refund declaration that does not meet the conditions. If the tax authority has completed the tax refund review and disbursed the refund to the account，you shall immediately return the tax refund to the tax designated account via the original route before submitting the correction application.
Then trace the core loopholes at the source of the false declaration: most of such false declarations are caused by the blind spot in understanding the scope of non-refundable goods，for example，free samples，foreign aid materials，prohibited export goods，etc. are not within the scope of tax refund. Failure to complete systematic training for new employees and lack of double-person recheck mechanism are also common incentives. If the handling is delayed，it may be identified as suspected tax fraud by the tax authority，which will then trigger tax correspondence adjustment，affect the company's tax credit rating，and even suspend the tax refund review of subsequent normal goods.
Finally，build a long-term risk control closed loop: establish a document pre-review mechanism before tax refund declaration，check the matching degree of goods attributes，customs declaration remarks and input invoice information before each declaration，new employees shall complete the whole process practical operation training before being independently responsible for declaration，at the same time，set up a double-person recheck node，where senior personnel carry out secondary verification on the declaration data，so as to avoid similar false declarations from the source.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
For the situation that non-refundable goods are wrongly declared for tax refund, first of all, the declaration information on the customs declaration form shall be checked. If the customs declaration form does not clearly mark that the goods are of non-refundable attributes such as "sample", it is necessary to apply to the customs for modification of the customs declaration form and supplement the remarks of goods attributes to ensure that the customs data is consistent with the tax declaration data. To apply for modification of the customs declaration form, you need to submit the Application Form for Modification/Revocation of Customs Declaration Form, the original customs declaration form, proof materials of goods attributes (such as sample delivery order, customer confirmation letter), etc. The process usually takes 3-5 working days, which shall be completed as far as possible before the tax authority initiates verification, so as to avoid double verification caused by inconsistent data.
In addition, if the goods have been cleared, the modification of the customs declaration form shall ensure that no change of customs supervision conditions is involved, otherwise it may trigger on-site inspection, and a full set of supporting documents shall be prepared in advance to cooperate with the customs review. The modified customs declaration form will be used as the core supporting material for the tax authority to correct the tax refund declaration, so as to ensure the compliance of the whole link data.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
If the goods wrongly declared for tax refund are shipped samples or non-refundable goods, the ownership of goods and document information in the logistics link shall be checked simultaneously. First of all, confirm whether the overseas customer has signed for the goods.
If the goods are still in transit, it is necessary to avoid the freezing of logistics documents caused by domestic tax abnormalities, which will affect overseas customs clearance. If the goods have arrived at the port, it is necessary to promptly remind the overseas customer to adjust the customs clearance documents, so as to avoid the inconsistency between the domestic tax declaration information and the destination customs clearance documents, which may cause doubts from the local customs, and even lead to risks of port demurrage and cargo detention.
For the subsequent shipment of non-refundable goods, it is recommended to clearly mark "non-refundable goods" on the logistics entrustment order to remind the freight forwarder to accurately fill in the goods attributes when declaring customs, so as to avoid confusion with refundable goods. At the same time, establish a cross-check mechanism between logistics documents and tax refund declaration data, and complete the matching verification between logistics documents and tax refund declaration list within 3 working days after each shipment, so as to reduce the probability of false declaration from the logistics source.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
After wrongly declaring non-refundable goods as refundable goods, in addition to proactively correcting the declaration, it is necessary to timely assess the tax risk exposure. First of all, sort out the company's export tax refund declaration records in the past 12 months, and check whether there are similar false declarations to avoid the accumulation of batch risks. If the company has a large number of non-refundable goods shipped, it can consider optimizing the tax structure, for example, adopting the VAT deferral policy to defer the VAT payment link of non-refundable goods to the importing country, so as to reduce the complexity of domestic fiscal and tax processing and the probability of false declaration.
For small foreign trade companies, they can proactively explain to the tax authority that the false declaration is an operational error of new employees and not subjective malice, apply for the application of the tax fault tolerance mechanism, and strive for lenient treatment to avoid the deduction of tax credit rating points. At the same time, it is recommended to establish a tax risk early warning ledger, review the tax refund declaration data every month, and focus on checking the declaration marks of non-refundable goods to ensure the compliance of the whole process of fiscal and tax processing.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
If the goods wrongly declared for tax refund involve the link of foreign exchange receipt and payment, the compliance of foreign exchange receipt and payment data shall be checked simultaneously. For non-refundable goods such as free samples with no corresponding foreign exchange receipt records, it is necessary to submit the Application for Correction of Trade Foreign Exchange Receipt and Payment Information Declaration to the foreign exchange administration department, clearly stating that the goods are non-foreign exchange receipt samples, so as to avoid foreign exchange verification caused by the mismatch between foreign exchange receipt and payment data and tax refund declaration data.
For the subsequent shipment of non-refundable goods, the mark of "non-refundable goods" shall be accurately marked when declaring foreign exchange receipt and payment, so as to ensure the consistency between foreign exchange data and tax declaration data. At the same time, establish a linkage verification mechanism between foreign exchange receipt and payment data and tax refund declaration data, and complete the matching check with the tax refund declaration list within 5 working days after each foreign exchange receipt or payment, so as to avoid compliance risks caused by data deviation. If the foreign exchange early warning has been triggered by the false declaration, it is necessary to timely submit supporting materials such as sample confirmation letter and delivery order to explain the situation, and apply for revoking the early warning record.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
If the goods wrongly declared for tax refund are non-refundable goods agreed in the contract, the terms of the trade contract shall be checked simultaneously. If the contract clearly stipulates that the goods are non-refundable samples, gifts or foreign aid materials, the original contract and its translation shall be submitted to the tax authority as core supporting materials to prove that the false declaration is an operational error, not subjective malicious tax fraud. If there is a compliance dispute between the company and the tax authority due to the false declaration, it is necessary to quickly sort out the full set of evidence chain, including trade contract, customs declaration form, logistics documents, delivery order, customer confirmation letter, etc., to protect the legitimate rights and interests of the company and avoid being identified as tax fraud.
For trade contracts signed subsequently, it is recommended to clearly mark in the contract whether the goods are eligible for export tax refund, so as to avoid operational errors caused by vague terms. At the same time, establish a corresponding mechanism between contract terms and tax refund declaration, and complete the fiscal and tax adaptability review of the terms within 3 working days after each contract is signed, so as to ensure that the basis for tax refund declaration is legal and compliant.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
If the goods wrongly declared for tax refund are found to have inconsistent attributes during the customs on-site inspection stage, it is necessary to fully cooperate with the customs to complete the inspection process. First of all, prepare a full set of supporting materials such as sample confirmation letter, delivery order and trade contract of the goods, truthfully explain the reason for the false declaration to the on-site customs officer, and strive to complete the inspection and release quickly, so as to avoid additional costs such as container detention fee and port demurrage.
If the goods have passed the inspection but are subject to retrospective re-inspection by the customs due to the false tax refund declaration later, it is necessary to submit supporting materials again to ensure that the actual attributes of the goods are consistent with the information on the adjusted customs declaration form. For the subsequent customs declaration of non-refundable goods, it is recommended to proactively explain the goods attributes to the customs officer during on-site declaration, and remind the declaration personnel to accurately mark the remarks on the customs declaration form, so as to avoid unnecessary inspection caused by unclear marking. At the same time, establish an on-site inspection response ledger, record the inspection situation and attribute description of each batch of goods, so as to provide compliance supporting for subsequent tax refund declaration.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
If the goods wrongly declared for tax refund are non-refundable dangerous goods, the packaging compliance shall be checked simultaneously to avoid joint risks caused by the tax false declaration. First of all, confirm whether the MSDS report of the goods, UN dangerous goods packaging mark and packaging inspection report are complete and valid. If the packaging does not meet the transportation standards for dangerous goods, it is necessary to supplement and rectify in time to avoid the goods being detained or stranded at the port due to packaging problems.
For the export of dangerous goods, it is recommended to clearly mark the "dangerous goods" mark on the outer packaging box, and mark it prominently on the logistics entrustment order to remind the declaration personnel to accurately declare the goods attributes, so as to avoid confusion with ordinary refundable goods. In addition, establish a checking mechanism between packaging documents and tax refund declaration data. Within 3 working days after each batch of dangerous goods is shipped, match and verify the MSDS report, packaging inspection report and tax refund declaration list to ensure that the packaging compliance is consistent with the tax declaration information and reduce the probability of false declaration.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
After the false tax refund declaration, it is necessary to immediately initiate the document retrospective audit, sort out the full set of documents of the batch of goods, including customs declaration form, input invoice, delivery order, customer confirmation letter, etc., to confirm the logical consistency between the documents. If the input invoice of the batch of goods is of non-deductible type, it is necessary to remove the invoice from the tax refund declaration and submit the Application for Input Tax Transfer Out to the tax authority. For the tax refund declaration documents in the past 6 months, it is necessary to carry out a comprehensive audit and inspection, focusing on checking the document marks of non-refundable goods, so as to avoid the accumulation of batch false declaration risks.
At the same time, establish a "three-review mechanism" for document management: the first review checks the matching between goods attributes and customs declaration remarks, the second review checks the matching degree between input invoices and goods categories, the third review checks the logical consistency between declaration data and documents, so as to plug the loopholes of false declaration from the document level. If the tax correspondence adjustment has been triggered by the false declaration, it is necessary to cooperate in completing the correspondence adjustment reply, and submit a full set of documents to prove that the false declaration is an operational error, not a subjective malicious act.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
The situation of false tax refund declaration exposes the loopholes in the linkage of supply chain data, and it is necessary to solve the problem from the source by optimizing supply chain planning. First of all, embed the goods attribute information into the Supply Chain Management (SCM) system, automatically mark the "refundable" or "non-refundable" mark when the goods are delivered from the warehouse, and push it to the tax refund declaration system synchronously, replacing manual entry and reducing operational errors. For the shipment of non-refundable goods, optimize the supply chain process, physically separate their shipping routes and customs declaration channels from those of refundable goods, so as to avoid mixed loading and mixed declaration.
At the same time, establish a monthly review mechanism for supply chain data, review and analyze the attributes and declaration status of goods shipped in the current month at the end of each month, adjust inventory management and shipping plans, and reduce the probability of mixed loading of non-refundable goods and refundable goods. In addition, adjust the supply chain cost accounting model according to the proportion of non-refundable goods shipped by the company, incorporate the fiscal and tax costs of non-refundable goods into the total supply chain cost, and improve the overall operational efficiency and compliance.