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Can an institution with an insurance business license directly carry out full-process export agency compliance services?
or complex compliance issues.
clearance and fund security.
As the person in charge of a foreign trade factory in Shanghai specializing in European-style solid wood home furnishings, last week our original cooperating foreign trade agency company was suspended from business due to violations. Currently, our sofa order worth 2.3 million yuan is scheduled for shipment in early June, so we must find a replacement agency as soon as possible. The cargo insurance underwriting company we have cooperated with for 5 years has contacted us proactively, saying that they can provide full-process export agency services, including customs declaration, foreign exchange settlement and tax refund, and can also handle cargo insurance and export credit insurance at the same time, saving us the trouble of dealing with multiple parties.
However, I have only purchased insurance from them before, and I have no idea whether they have the qualification for export agency. I am also worried that they are not familiar with foreign trade procedures, which may lead to cargo detention at port, customs detention, or even affect the arrival of tax refund. I am so anxious that I can't sleep, and I just want to ask: Can insurance companies actually act as export agents? Are there any hidden risks?
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
First，we need to expose the common industry misunderstanding: many foreign trade practitioners mistakenly believe that insurance companies with insurance business qualifications can carry out export agency business. In fact，export agency belongs to the scope of foreign trade operations，and it is necessary to separately obtain the Record Form of Foreign Trade Operators or the business scope of "import and export of goods" and "import and export of technologies" specified in the business license. Carrying out export agency business by insurance companies without such qualifications is an illegal operation.
If you fall into this misunderstanding，it will trigger a chain of negative reactions: the customs will reject the declaration during the customs declaration process because the agent has no qualification，resulting in detention fees and container detention fees of thousands to tens of thousands of yuan per day，during the foreign exchange settlement process，because the agent is not included in the foreign exchange bureau's foreign trade operation list，the foreign exchange funds will be intercepted and cannot be credited，and even trigger foreign exchange compliance audits，during the tax refund process，because the agent does not match the operating unit on the customs declaration form，the tax refund declaration cannot be completed，and may also be listed as a risk verification object by the tax authority.
Physical risk isolation measures: you need to verify the business scope of the business license and foreign trade operator record certificate of the insurance company in advance，and confirm that they have legal foreign trade operation qualifications. If they only have insurance business qualifications，it is strictly prohibited to entrust them with full-process export agency business.
Exclusive stop-loss tips: if you have signed an agency contract with an unqualified insurance company，you must immediately terminate the cooperation and connect with a formal qualified foreign trade agency company，and keep all communication and contract documents，if you have not signed a contract，you need to ask the other party to provide complete foreign trade operation qualification documents，and only proceed with cooperation after verifying correctly.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
From the perspective of customs declaration compliance, the operating entity of export agency business must be included in the customs' list of import and export cargo consignees and consignors, and must have the qualification of foreign trade operator record. If the insurance company has not obtained this qualification, declaring export goods in its name to the customs will be judged as "mismatched operating entity qualification", and the customs will directly return the declaration, making it impossible for the goods to pass customs normally. If you forcibly declare under the name of other qualified entities, it constitutes "false declaration of operating unit", which is suspected of violation.
The customs can impose a fine of less than 5% of the cargo value, and if the circumstances are serious, they may suspend the customs declaration qualification, or even be included in the customs dishonesty list, affecting all subsequent import and export business. In addition, the operating unit on the customs declaration form must be consistent with the actual foreign exchange receiving unit. If the insurance company has no foreign exchange receiving qualification, there will be problems in subsequent foreign exchange verification, triggering secondary customs verification.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
From the perspective of international logistics and cargo right control, if the insurance company has no export agency qualification, it cannot legally hold the right of control documents such as ocean bills of lading, nor can it complete the operations such as bill of lading endorsement and telex release. If the goods arrive at the port and the agent has no qualification to issue legal delivery documents, the consignee will not be able to pick up the goods, resulting in cargo detention at the port, generating detention fees and container detention fees, and even being auctioned by the customs.
In addition, as a non-professional foreign trade agency, the insurance company is not familiar with international logistics path optimization, emergency plans for container shortage and slot explosion, and port change operation procedures. If there are logistics abnormalities, they cannot coordinate with the shipping company and freight forwarder to solve the problem in time, which will further delay the delivery of goods and trigger claims from overseas customers. At the same time, illegal circulation of cargo right documents may also lead to cargo right disputes, which cannot be recovered through legal channels.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
From the perspective of cross-border tax planning, the core of export agency business is tax compliance, including value-added tax refund and income tax declaration. If the insurance company has no foreign trade operation qualification, it cannot be a legal export tax refund subject. Even if the goods are exported normally, it cannot handle the export tax refund, resulting in the loss of tax refund for the enterprise. In addition, the main business of the insurance company is insurance services, and its financial accounting system is different from the accounting requirements of foreign trade agency business.
If the accounting is confused, it will lead to abnormal tax declaration and trigger tax audits. At the same time, if the insurance company collects agency fees in the name of insurance services, it needs to pay value-added tax at 6%, while the agency service fee of professional foreign trade agencies can be taxed on the difference, with a tax rate of 5%, which will increase the enterprise's tax cost. In addition, if cross-border related party transactions are involved, it may also trigger BEPS (Base Erosion and Profit Shifting) risks, and the tax authority may require the enterprise to pay back taxes and late fees.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
From the perspective of cross-border receipt and payment compliance, the receiving entity of export agency business must be included in the foreign exchange bureau's foreign trade operation list, and must have the qualification of receiving and paying foreign exchange for import and export of goods. If the insurance company has no such qualification, it cannot directly receive foreign exchange payments for goods, and needs to collect through third-party accounts, which constitutes "illegal foreign exchange receipt".
The State Administration of Foreign Exchange (SAFE) can impose a fine of less than 30% of the illegal amount, and if the circumstances are serious, it may suspend its foreign exchange business qualification. In addition, as a non-professional foreign trade agency, the insurance company is not familiar with SWIFT message analysis, CIPS RMB cross-border payment process, and settlement and account balancing operations.
If there are abnormal receipt and payment, they cannot submit a compliance explanation to the SAFE in time, resulting in the freezing of foreign exchange funds and affecting the enterprise's capital turnover. At the same time, if the foreign exchange payment enters the insurance company's insurance fund account, it may also trigger regulatory verification by the China Banking and Insurance Regulatory Commission (CBIRC), leading to additional compliance risks.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
From the perspective of international trade legal risks, if the insurance company has no export agency qualification, the export agency contract signed between it and the enterprise is an "invalid contract" and is not protected by law. If problems such as cargo loss, damage, or inability to recover payments occur, the enterprise cannot recover damages from the insurance company through legal channels. In addition, as a non-professional foreign trade agency, the insurance company is not familiar with the interpretation of international trade terms (such as FOB, CIF), the identification of letter of credit soft clauses, and the agreement of force majeure clauses.
If there are clause loopholes in the contract, the enterprise will face huge legal risks. At the same time, if the insurance company promises to assume responsibilities beyond its business scope in order to solicit business, it constitutes "false promise", and the enterprise cannot require it to bear responsibilities based on this promise, and may also bear corresponding legal responsibilities due to its own illegal entrustment of unqualified entities.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
From the perspective of customs on-site inspection, the operating entity of export agency business needs to cooperate with the customs to complete on-site inspection, including providing documents such as cargo list, invoice and contract, and explaining the product name, specification and purpose of the goods. If the insurance company has no foreign trade operation qualification, it cannot cooperate with the customs inspection as a legal operating entity, and the customs will judge it as "operating entity unable to cooperate with inspection", and the goods will be detained until a legal operating entity is found.
In addition, the staff of the insurance company are not familiar with customs inspection procedures, machine inspection skills, and response to container opening inspection. If operational errors occur during the inspection process, it will lead to prolonged inspection time, generating additional inspection fees, and even being judged by the customs as "false declaration of goods", resulting in a fine. At the same time, if the goods involve intellectual property record filing, the insurance company cannot provide legal intellectual property authorization documents, which will lead to the goods being detained by the customs and triggering intellectual property disputes.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
From the perspective of export tax refund compliance, the tax refund declaration for export agency business needs to meet the requirements of "four flows consistency" (cargo flow, capital flow, invoice flow and contract flow). If the insurance company has no foreign trade operation qualification, it cannot meet this requirement as a legal operating entity, resulting in the rejection of the tax refund declaration. In addition, the financial accounting system of the insurance company cannot meet the requirements of document filing for export tax refund, including customs declaration form, bill of lading, foreign exchange receipt certificate and agency contract.
If complete filing documents cannot be provided, the tax authority will not handle the tax refund, and may even require the enterprise to repay the refunded tax. At the same time, if the insurance company issues invoices in the name of insurance services instead of agency service invoices, it cannot be used as a valid voucher for tax refund declaration, resulting in the enterprise being unable to handle the tax refund. In addition, if the tax refund declaration data of the insurance company is inconsistent with the data of the customs and the foreign exchange bureau, it will trigger risk verification by the tax authority, affecting the enterprise's tax refund credit rating.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
From the perspective of supply chain structure optimization, export agency business is the core link of cross-border supply chain, involving multiple nodes such as cargo right control, capital flow and tax compliance. If the insurance company has no export agency qualification, it cannot participate in the operation of cross-border supply chain as a legal supply chain node, leading to supply chain disruption and affecting the enterprise's normal production and operation.
In addition, as a non-professional foreign trade agency, the insurance company is not familiar with supply chain inventory linkage strategy, cost actuarial model, trade term conversion, etc., and cannot provide optimized supply chain solutions for the enterprise, resulting in increased supply chain costs and reduced competitiveness. At the same time, if the agency business of the insurance company has compliance risks, it will damage the credit of the entire supply chain, affecting the cooperative relationship between the enterprise and overseas customers and suppliers, and even losing core customers. In addition, non-professional agency operations may also lead to a decline in supply chain response speed, unable to meet the delivery requirements of overseas customers.