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How to Operate the Whole Process of Transit Trade Import and Export in Compliance to Effectively Avoid the Risk of Customs Detention?
or complex compliance issues.
clearance and fund security.
I am the head of a foreign trade enterprise in Shanghai mainly engaged in the export of mechanical and electrical equipment. Recently, because the United States has imposed high anti-dumping duties on our core products, we have to consider transit trade to avoid taxes and fees, but we have no relevant operation experience before.
When I attended an industry salon last week, I heard from peers that a friend's goods were detained by the customs of a third country due to document discrepancies when doing transit trade, which cost more than 100,000 yuan in port detention charges and fines, and finally the customer canceled the order. I am very anxious now.
I would like to ask how to operate transit trade import and export specifically, and what details should be focused on to avoid risks such as customs detention and port detention, while ensuring the compliance of foreign exchange receipt and payment, which will not affect our subsequent export tax refund. After all, this is too critical for our small enterprise.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
First，complete the detail control of preliminary document verification. It is necessary to focus on checking three types of core documents: authenticity of third-country certificate of origin，transit country warehousing agreement，and bill of lading endorsement documents，to ensure that the goods description and HS Code on the certificate of origin fully match the regulatory requirements of the final importing country. At the same time，confirm that the qualification of the transit warehouse meets the bonded supervision standards of local customs，so as to avoid triggering customs valuation or customs detention alert due to inconsistent document logic.
For the connection of core nodes，it is necessary to realize the seamless synchronization of the three flows of "goods，documents and funds": Before the goods are sent from China to the transit country，the complete information of the goods shall be pre-entered into the transit warehouse 3 days in advance，so as to avoid port detention caused by information lag after the goods arrive at the port，Document transmission shall adopt encrypted electronic channels to ensure that the customs filing of the transit country is completed 24 hours before the arrival of the goods，When receiving and paying foreign exchange，use a compliant cross-border payment channel，and clearly mark "transit trade transit payment" in the remarks，to avoid being listed as an abnormal transaction by the bank and freezing the account.
Abnormal contingency plans should be arranged in advance，and emergency service agreements should be signed with local customs clearance agents in the transit country. Once a customs detention warning occurs，immediately launch the third-party supervised warehouse temporary storage plan，transfer the goods to a compliant supervised warehouse for physical isolation，and at the same time，a professional team shall supplement supporting materials or initiate customs reconsideration，If the customs of the final importing country questions the origin，core supporting materials such as loading and unloading photos of the transit country，warehousing temperature logs，and container seal replacement records shall be prepared in advance.
In the final compliance implementation stage，all operation documents shall be retained for at least 5 years，including loading and unloading vouchers of the transit country，foreign exchange receipt and payment slips，copies of certificate of origin，etc。to ensure that a complete logical chain can be provided during subsequent customs or tax verification，Complete the export tax refund filing simultaneously，clearly mark the attribute of transit trade，and avoid affecting the tax refund qualification due to ambiguous information.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
When declaring customs for transit trade, focus on the consistency of HS Code. The HS Codes used for domestic export declaration, transit country customs clearance and final importing country declaration must be completely consistent. If there is a code difference, the customs will directly determine that the goods do not match the documents and trigger customs detention.
At the same time, avoid underreporting the price. The customs of the transit country will conduct valuation through the price database of goods of the same category in the same period. If the declared price is more than 30% lower than the average value of the database, the mandatory valuation process will be initiated, resulting in 3-7 days of port detention of the goods.
In addition, the customs declaration form for transit trade must clearly mark the attribute of "transit" to avoid being classified as general trade, which will trigger subsequent tax audits. In case of valuation disputes, supporting materials such as transit country warehousing cost vouchers and goods loading and unloading records shall be provided immediately, and oral explanation alone shall not be used.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
For the logistics route of transit trade, priority should be given to routes with direct transit shipping space to avoid the risk of goods title caused by multiple transits. At the same time, confirm the free storage period of the transit country. Generally, the free storage period of Southeast Asian transit countries is 7-10 days.
The loading, unloading and transshipment of goods should be arranged in advance to avoid container detention charges. When replacing containers in the transit country, videos and photos of seal replacement shall be taken throughout the process to ensure the traceability of goods title.
At the same time, transit warehouses with bonded warehousing qualifications shall be selected to avoid high warehousing tax levied by local customs after the goods enter ordinary warehouses. In case of space rolling, sign a space guarantee agreement with the shipping line in advance to ensure that the goods can be transferred to other sailing schedules within 48 hours, so as to avoid delaying the delivery time.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
Cost optimization of transit trade can be realized through VAT deferment policy. Some transit countries such as Malaysia and Singapore provide VAT deferment filing services for transit goods. There is no need to pay import VAT in the transit link, and only need to complete the filing after the final departure of the goods, which can save about 10%-15% of cash flow occupation. At the same time, pay attention to the rationality of related party transaction pricing.
The profit range of transit trade should be controlled between 5% and 8% of the industry average, so as to avoid triggering BEPS investigation due to excessive profit, which will lead to tax recovery and late fee by the tax authority. In addition, domestic enterprises shall account for the income from transit trade separately to avoid confusion with the income from general trade, which will affect the application qualification for export tax refund.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
Foreign exchange receipt and payment for transit trade shall be completed through the CIPS system to ensure the traceability of the capital chain. The amount of foreign exchange receipt and payment shall be completely consistent with the amount on the bill of lading and commercial invoice. If the amount difference exceeds 5%, the bank will list the transaction as abnormal and suspend foreign exchange settlement.
At the same time, add the mark of "TRANSIT TRADE" in the SWIFT message to clarify the transaction attribute and avoid being warned by the anti-money laundering system. Pay attention to the use of offshore accounts. Some offshore accounts in transit countries have strict restrictions on the capital flow of transit trade.
Confirm the foreign exchange receipt and payment limit and handling fee standard of the account in advance to avoid fund retention due to insufficient limit. In addition, reconcile the foreign exchange receipt and payment records of transit trade every month to ensure that they fully match the document information.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
A tripartite agreement shall be signed for transit trade to clarify the rights and obligations of the domestic seller, transit warehouse and foreign buyer. In particular, the node of goods title transfer shall be agreed.
Generally, after the goods enter the bonded warehouse of the transit country and complete the filing, the goods title is officially transferred to the foreign buyer, so as to avoid disputes caused by unclear ownership of goods title. At the same time, force majeure clauses shall be added to clarify which party shall bear the responsibility if the goods cannot be transited due to policy changes in the transit country, so as to avoid high compensation caused by policy risks.
In addition, the authenticity of the certificate of origin shall be agreed. If the customs detention is caused by the false certificate of origin provided by a third party, the transit warehouse shall bear the corresponding compensation liability, including port detention charges, fines, etc.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
The export tax refund for transit trade shall meet the requirement of "consistency of four flows", that is, the goods flow, capital flow, document flow and contract flow are completely matched. Supporting materials such as the transit country warehousing agreement, copy of bill of lading, and foreign exchange receipt and payment slips shall be provided to ensure the compliance of the tax refund application. At the same time, note that if the goods of transit trade do not actually depart from the country, export tax refund cannot be applied for.
The departure certificate of the goods shall be confirmed in advance to avoid the rejection of the tax refund application due to lack of information. In addition, the pre-declaration of tax refund shall be completed within 30 days after the export of the goods to avoid exceeding the declaration period and affecting the tax refund progress. In case of tax correspondence verification, timely provide materials such as loading and unloading records of the transit country and warehousing vouchers to ensure the smooth passage of the correspondence verification.