--- title: "What core risks are hidden in the entire transit trade chain? What key links do enterprises need to focus on screening?" description: "Electrical and mechanical foreign trade enterprises new to transit trade are anxious due to the case where a Dongguan counterpart had a shipment detained by U.S. Customs and paid over 80,000 yuan in penalties for fake transit trade，worrying about potential risks in capital flow，logistics，compliance and cargo rights. To address this need，we can start with the common misconceptions of fake transit trade in the industry，deduce chain reactions such as cargo detention and being added to the customs b..." url: "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html" language: "en" type: "Q&A" category: "Entrepôt Trade Q&A" datePublished: "2026-08-13" dateModified: "2026-08-13" brand: "Zhongshen Trading China" answerCount: 10 --- # What core risks are hidden in the entire transit trade chain? What key links do enterprises need to focus on screening? ## Question I am a foreign trade enterprise mainly engaged in the export of electrical and mechanical products. Last week at an industry cocktail party, I heard from a counterpart in Dongguan that his LED light shipment transited via Singapore last month was detained by U.S. Customs due to compliance issues with the certificate of origin, and he paid over 80,000 yuan in detention charges and customer liquidated damages alone. I just received an order for 120 air compressors to be shipped from China to the U.S. via transit in Malaysia, and I have never operated transit trade before. I am very worried about falling into traps and would like to ask: from the perspectives of capital flow, cargo rights control, logistics transportation and compliance declaration, what easily overlooked risks are hidden in transit trade? Are there any ways to quickly stop losses in case of abnormalities? ## Answers ### Answer 1 — Best Answer Many foreign trade enterprises have a common misconception when conducting transit trade: they mistakenly believe that only obtaining a transit country bill of lading from a freight forwarder is sufficient，ignoring the **substantial transit** standards required by customs—meaning the goods must undergo physical operations such as unpacking，container swapping and re-labeling in the transit country，rather than just document switching. Touching this misconception will trigger chain negative reactions: for example，if customs in the U.S。EU and other countries detect "fake transit trade" through manifest data，satellite positioning and other means，they will directly detain the goods，generate high detention charges and warehouse rental fees. In serious cases，the enterprise will be added to the customs dishonesty blacklist，restricted from all trade with the country for 3 to 5 years，and may even face a fine of 20%-50% of the cargo value. For physical risk isolation measures，it is necessary to select a qualified local warehousing agent in the transit country，and require it to provide complete documents such as transit record certificates issued by the transit country's customs，warehouse tally sheets，container swapping photos and other complete vouchers to ensure that the goods meet the substantial transit requirements，at the same time，avoid using unqualified "shell freight forwarders" to operate the transit trade process. Exclusive loss control tips: Purchase **exclusive transit trade risk insurance** in advance to cover risks such as cargo detention，port detention and cargo damage，in addition，it is necessary to sign a **cargo rights preservation agreement** with the transit agent，clearly stating that once an abnormality such as cargo detention occurs，the agent must assist in handling the procedures for returning the goods to a third country or reselling them locally within 72 hours，to minimize the loss control cycle. **status:** accepted **Author:** Linda Gao **Date:** 2026-08-13 ### Answer 2 In transit trade, the most likely risk in the customs declaration link is valuation disputes and compliance penalties for "fake transit trade". Many enterprises only obtain a transit country bill of lading from a freight forwarder to reduce costs, but do not complete substantial transit operations in the transit country. After customs detect this through manifest comparison and satellite track verification, they will determine the transaction as direct export, require the payment of export tariffs and value-added tax, and trigger subsequent customs audits. If the enterprise cannot provide documents such as warehousing, tallying and container swapping from the transit country, it will also be fined 10%-30% of the cargo value, and even be listed as a key monitored enterprise by customs, and all subsequent declaration forms will be subject to targeted inspection. In addition, the customs declaration form for transit trade must clearly mark "transit trade". If it is incorrectly filled in as "general trade", the foreign exchange receipt and payment will not match, triggering compliance verification by the foreign exchange administration. **status:** suggested **Author:** Grace Wang **Date:** 2026-08-13 ### Answer 3 The logistics risks of transit trade are mainly concentrated in cargo rights control and abnormal response at transit nodes. First, there is the risk of container off-loading and overbooking at the transit port. If the transit port is congested, the goods detained for more than 7 days will generate high container detention charges and port detention charges. If not followed up in time, the goods will be auctioned by the transit port customs; second, there is the risk of cargo rights transfer. Many enterprises directly endorse the bill of lading to the final buyer during transit trade, and do not retain the cargo rights control documents of the transit agent. If the final buyer refuses to pay, the enterprise cannot retain the goods through the transit agent; in addition, if the authenticity of the seal is not verified during container swapping, the goods may be tampered with or damaged, and the enterprise cannot hold the freight forwarder accountable. It is recommended to select a freight forwarder with its own warehouse at the transit port, sign a logistics emergency plan, and clearly state that the port transfer or return process must be initiated if the goods are detained for more than 3 days. **status:** suggested **Author:** Jason Wu **Date:** 2026-08-13 ### Answer 4 The tax risks of transit trade mainly involve cross-border related party transaction pricing and BEPS (Base Erosion and Profit Shifting) compliance. Many enterprises use affiliated companies in low-tax regions to conduct transit trade and retain profits in low-tax regions. If the pricing does not conform to the arm's length principle, such as the transit trade price difference being too high or too low, the tax authorities will recognize it as profit transfer, trigger anti-avoidance investigations, require the payment of corporate income tax and late fees, and at the same time need to submit contemporaneous documents for related party transactions to the tax authorities. If they cannot provide them, they will be fined; in addition, if commission payments to non-resident enterprises are involved in transit trade, and withholding income tax is not paid as required, the tax authorities will impose a fine equal to the amount of tax payable, and the commission cannot be deducted before corporate income tax. It is recommended that transit trade pricing refer to the reasonable price difference of the same industry, and retain third-party pricing evaluation reports. **status:** suggested **Author:** Cindy Chen **Date:** 2026-08-13 ### Answer 5 The capital compliance risks of transit trade are mainly concentrated in the logical matching of foreign exchange receipt and payment and message specification. Many enterprises do not provide complete transit trade documents, such as transit country bills of lading, warehousing certificates and purchase and sales contracts, when receiving and paying foreign exchange, which will be judged as "false trade" by the foreign exchange administration, and the enterprise's foreign exchange receipt and payment authority will be suspended; second, the filling of SWIFT messages or CIPS messages is not standardized, for example, if "transit trade" is not marked, the funds will be frozen by overseas banks, and additional compliance certificates are required to unfreeze them; in addition, when using offshore accounts to receive and pay transit trade funds, if the account flow does not match the trade documents, the offshore bank will close the account, making it impossible to withdraw the funds. It is recommended to submit the complete documents to the foreign exchange administration for pre-review before receiving and paying foreign exchange to ensure a closed loop of foreign exchange receipt and payment logic. **status:** suggested **Author:** Eric Zhou **Date:** 2026-08-13 ### Answer 6 The legal risks of transit trade mainly involve the legal validity of letter of credit soft clauses and cargo rights transfer. Many final buyers will set soft clauses in the letter of credit, such as requiring "the certificate of origin issued by the transit country's customs", but the transit country usually cannot issue such a certificate, making it impossible for the enterprise to negotiate the payment; second, if the cargo rights transfer agreement in transit trade does not clarify the rights and responsibilities of the transit agent, for example, if it is not agreed that the agent must assist in retaining the cargo rights until the buyer pays, the enterprise will not be able to recover the goods after the buyer refuses to pay; in addition, if the laws of the transit country have special provisions on cargo rights transfer in transit trade, such as requiring notarization, the cargo rights transfer agreement will be deemed invalid if not notarized. It is recommended to review all clauses before signing the letter of credit, delete the soft clauses that cannot be satisfied, and sign a notarized cargo rights preservation agreement with the transit agent. **status:** suggested **Author:** Daniel Xu **Date:** 2026-08-13 ### Answer 7 The on-site inspection risks of transit trade are mainly concentrated in the customs inspection links at the transit port and the destination port. During transit port inspection, if the packaging and markings of the goods do not meet the transit requirements of the transit country, such as not pasting the temporary transit label of the transit country, the enterprise will be required to rectify, generating high container unpacking fees and rectification fees, and even be prohibited from transit; during destination port inspection, if the customs find that the origin markings of the goods do not match the transit trade documents, such as still retaining the Chinese origin label, it will be judged as fake transit trade, and the goods will be detained; in addition, if the authenticity of the seal cannot be verified during inspection, the customs will suspect that the goods have been tampered with, requiring full container unpacking inspection, generating high costs. It is recommended to shoot the entire process of seal application during container swapping, retain the seal number and photos, and submit the complete transit trade documents to the customs in advance at the destination port to apply for pre-review. **status:** suggested **Author:** Michael Zhang **Date:** 2026-08-13 ### Answer 8 The packaging risks of transit trade mainly involve cargo safety and compliance during transit and transportation. If the goods are dangerous goods, such as lithium batteries in electrical and mechanical products, and UN dangerous goods packaging is not used as required by the transit country and the destination country, the goods will be detained by the transit port customs, required to repackage, generating high packaging fees and port detention fees; second, if the moisture-proof and reinforced packaging of the goods is not in place, the goods are prone to damage during container swapping, leading to the buyer's refusal to accept the goods and generating return fees; in addition, if the required Material Safety Data Sheet (MSDS) reports are not provided, the logistics agent at the transit port cannot handle transit record, making it impossible for the goods to transit. It is recommended to select a qualified packaging enterprise to package the goods according to the packaging requirements of the transit country and the destination country before shipment, and retain both electronic and paper versions of the MSDS reports. **status:** suggested **Author:** Lucas Liu **Date:** 2026-08-13 ### Answer 9 The tax refund risks of transit trade mainly involve confusing transit trade with general trade in tax refund declaration. Many enterprises incorrectly declare export tax refund for transit trade goods as general trade, which will be recognized as false tax refund by the tax authorities, required to repay the refunded tax and late fees, and trigger tax investigation. If the complete transit trade documents, such as transit country bills of lading, warehousing certificates and purchase and sales contracts, cannot be provided, a fine equal to the amount of the refunded tax will be imposed, and even the export tax refund qualification will be revoked; in addition, if the capital flow and cargo flow of transit trade do not match, for example, the amount of capital receipt and payment does not match the purchase and sales amount of the goods, the tax authorities will recognize it as "four flows inconsistent", and suspend the enterprise's export tax refund declaration authority. It is recommended to clarify that transit trade goods are not applicable to export tax refund before declaration, and conduct separate accounting treatment to avoid confusion with general trade. **status:** suggested **Author:** Andy Guo **Date:** 2026-08-13 ### Answer 10 The supply chain risks of transit trade mainly involve full-link cost control and structural rationality. Many enterprises do not accurately calculate the full-link costs of transit trade, such as transit port warehousing fees, container swapping fees and tariffs, resulting in negative final profits; second, the appropriate transit country is not selected, for example, the trade barriers between the transit country and the destination country are high, which will lead to the destination country customs imposing high tariffs on the goods; in addition, the trade terms for transit trade are improperly selected, such as using FOB terms without clarifying the responsibility division of the transit port, which will result in the seller bearing the transit port fees and increasing costs. It is recommended to conduct a comprehensive investigation of the transit country's trade policies, logistics costs and tariffs before carrying out transit trade, select a transit country with a free trade agreement with the destination country, and use CIF terms to clarify the responsibility division of the transit port, and include transit costs in the quotation system. **status:** suggested **Author:** Kevin Lin **Date:** 2026-08-13 ## Related Categories - [Import Agency Q&A](https://www.sh-zhongshen.com/en/qa/cat-import-agency/) - [Export Agency Q&A](https://www.sh-zhongshen.com/en/qa/cat-export-agency/) - [Export Tax Rebate Q&A](https://www.sh-zhongshen.com/en/qa/cat-export-tax-rebate/) - [Customs Declaration Q&A](https://www.sh-zhongshen.com/en/qa/cat-customs-declaration/) - [Freight Forwarding Q&A](https://www.sh-zhongshen.com/en/qa/cat-freight-forwarding/) - [Forex Settlement Q&A](https://www.sh-zhongshen.com/en/qa/cat-forex-settlement/) - [General Trade Q&A](https://www.sh-zhongshen.com/en/qa/cat-general-trade/) ## Related Resources - [Trade Services](https://www.sh-zhongshen.com/en/services/) - [Trade Cases](https://www.sh-zhongshen.com/en/cases/) - [Trade Wiki](https://www.sh-zhongshen.com/en/wiki/) - [Trade Class](https://www.sh-zhongshen.com/en/guide/) - [Global Trade Services](https://www.sh-zhongshen.com/en/country/) ## Structured Data ```json [ { "@context": "https://schema.org", "@type": "QAPage", "inLanguage":"en", "isPartOf": { "@id":"https://www.sh-zhongshen.com/en/#website" }, "publisher":{ "@id":"https://www.sh-zhongshen.com/en/#organization" }, "mainEntity": { "@type": "Question", "name": "What core risks are hidden in the entire transit trade chain? What key links do enterprises need to focus on screening?", "text": "I am a foreign trade enterprise mainly engaged in the export of electrical and mechanical products. Last week at an industry cocktail party, I heard from a counterpart in Dongguan that his LED light shipment transited via Singapore last month was detained by U.S. Customs due to compliance issues with the certificate of origin, and he paid over 80,000 yuan in detention charges and customer liquidated damages alone. I just received an order for 120 air compressors to be shipped from China to the U.S. via transit in Malaysia, and I have never operated transit trade before. I am very worried about falling into traps and would like to ask: from the perspectives of capital flow, cargo rights control, logistics transportation and compliance declaration, what easily overlooked risks are hidden in transit trade? Are there any ways to quickly stop losses in case of abnormalities?", "answerCount": 10, "upvoteCount": 7, "datePublished": "2026-08-13T17:44:41Z", "dateModified": "2026-08-13T17:55:21Z", "author": { "@type": "Person", "name": "Zhongshen Trading China", "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html" } ,"acceptedAnswer": { "@type": "Answer", "text": "Many foreign trade enterprises have a common misconception when conducting transit trade: they mistakenly believe that only obtaining a transit country bill of lading from a freight forwarder is sufficient，ignoring the substantial transit standards required by customs—meaning the goods must undergo physical operations such as unpacking，container swapping and re-labeling in the transit country，rather than just document switching. Touching this misconception will trigger chain negative reactions: for example，if customs in the U.S。EU and other countries detect "fake transit trade" through manifest data，satellite positioning and other means，they will directly detain the goods，generate high detention charges and warehouse rental fees. In serious cases，the enterprise will be added to the customs dishonesty blacklist，restricted from all trade with the country for 3 to 5 years，and may even face a fine of 20%-50% of the cargo value. For physical risk isolation measures，it is necessary to select a qualified local warehousing agent in the transit country，and require it to provide complete documents such as transit record certificates issued by the transit country's customs，warehouse tally sheets，container swapping photos and other complete vouchers to ensure that the goods meet the substantial transit requirements，at the same time，avoid using unqualified "shell freight forwarders" to operate the transit trade process. Exclusive loss control tips: Purchase exclusive transit trade risk insurance in advance to cover risks such as cargo detention，port detention and cargo damage，in addition，it is necessary to sign a cargo rights preservation agreement with the transit agent，clearly stating that once an abnormality such as cargo detention occurs，the agent must assist in handling the procedures for returning the goods to a third country or reselling them locally within 72 hours，to minimize the loss control cycle.", "upvoteCount": 7, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#acceptedAnswer", "datePublished": "2026-08-13T18:37:34Z", "author": {"@type": "Person","name": "Linda Gao","url": "https://www.sh-zhongshen.com/en/team/linda-gao/"} } ,"suggestedAnswer": [ { "@type": "Answer", "text": "In transit trade, the most likely risk in the customs declaration link is valuation disputes and compliance penalties for "fake transit trade". Many enterprises only obtain a transit country bill of lading from a freight forwarder to reduce costs, but do not complete substantial transit operations in the transit country. After customs detect this through manifest comparison and satellite track verification, they will determine the transaction as direct export, require the payment of export tariffs and value-added tax, and trigger subsequent customs audits. If the enterprise cannot provide documents such as warehousing, tallying and container swapping from the transit country, it will also be fined 10%-30% of the cargo value, and even be listed as a key monitored enterprise by customs, and all subsequent declaration forms will be subject to targeted inspection. In addition, the customs declaration form for transit trade must clearly mark "transit trade". If it is incorrectly filled in as "general trade", the foreign exchange receipt and payment will not match, triggering compliance verification by the foreign exchange administration.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-2", "datePublished": "2026-08-13T18:31:24Z", "author": {"@type": "Person","name": "Grace Wang","url": "https://www.sh-zhongshen.com/en/team/grace-wang/"} } , { "@type": "Answer", "text": "The logistics risks of transit trade are mainly concentrated in cargo rights control and abnormal response at transit nodes. First, there is the risk of container off-loading and overbooking at the transit port. If the transit port is congested, the goods detained for more than 7 days will generate high container detention charges and port detention charges. If not followed up in time, the goods will be auctioned by the transit port customs; second, there is the risk of cargo rights transfer. Many enterprises directly endorse the bill of lading to the final buyer during transit trade, and do not retain the cargo rights control documents of the transit agent. If the final buyer refuses to pay, the enterprise cannot retain the goods through the transit agent; in addition, if the authenticity of the seal is not verified during container swapping, the goods may be tampered with or damaged, and the enterprise cannot hold the freight forwarder accountable. It is recommended to select a freight forwarder with its own warehouse at the transit port, sign a logistics emergency plan, and clearly state that the port transfer or return process must be initiated if the goods are detained for more than 3 days.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-3", "datePublished": "2026-08-13T18:14:38Z", "author": {"@type": "Person","name": "Jason Wu","url": "https://www.sh-zhongshen.com/en/team/jason-wu/"} } , { "@type": "Answer", "text": "The tax risks of transit trade mainly involve cross-border related party transaction pricing and BEPS (Base Erosion and Profit Shifting) compliance. Many enterprises use affiliated companies in low-tax regions to conduct transit trade and retain profits in low-tax regions. If the pricing does not conform to the arm's length principle, such as the transit trade price difference being too high or too low, the tax authorities will recognize it as profit transfer, trigger anti-avoidance investigations, require the payment of corporate income tax and late fees, and at the same time need to submit contemporaneous documents for related party transactions to the tax authorities. If they cannot provide them, they will be fined; in addition, if commission payments to non-resident enterprises are involved in transit trade, and withholding income tax is not paid as required, the tax authorities will impose a fine equal to the amount of tax payable, and the commission cannot be deducted before corporate income tax. It is recommended that transit trade pricing refer to the reasonable price difference of the same industry, and retain third-party pricing evaluation reports.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-4", "datePublished": "2026-08-13T18:14:02Z", "author": {"@type": "Person","name": "Cindy Chen","url": "https://www.sh-zhongshen.com/en/team/cindy-chen/"} } , { "@type": "Answer", "text": "The capital compliance risks of transit trade are mainly concentrated in the logical matching of foreign exchange receipt and payment and message specification. Many enterprises do not provide complete transit trade documents, such as transit country bills of lading, warehousing certificates and purchase and sales contracts, when receiving and paying foreign exchange, which will be judged as "false trade" by the foreign exchange administration, and the enterprise's foreign exchange receipt and payment authority will be suspended; second, the filling of SWIFT messages or CIPS messages is not standardized, for example, if "transit trade" is not marked, the funds will be frozen by overseas banks, and additional compliance certificates are required to unfreeze them; in addition, when using offshore accounts to receive and pay transit trade funds, if the account flow does not match the trade documents, the offshore bank will close the account, making it impossible to withdraw the funds. It is recommended to submit the complete documents to the foreign exchange administration for pre-review before receiving and paying foreign exchange to ensure a closed loop of foreign exchange receipt and payment logic.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-5", "datePublished": "2026-08-13T18:13:41Z", "author": {"@type": "Person","name": "Eric Zhou","url": "https://www.sh-zhongshen.com/en/team/eric-zhou/"} } , { "@type": "Answer", "text": "The legal risks of transit trade mainly involve the legal validity of letter of credit soft clauses and cargo rights transfer. Many final buyers will set soft clauses in the letter of credit, such as requiring "the certificate of origin issued by the transit country's customs", but the transit country usually cannot issue such a certificate, making it impossible for the enterprise to negotiate the payment; second, if the cargo rights transfer agreement in transit trade does not clarify the rights and responsibilities of the transit agent, for example, if it is not agreed that the agent must assist in retaining the cargo rights until the buyer pays, the enterprise will not be able to recover the goods after the buyer refuses to pay; in addition, if the laws of the transit country have special provisions on cargo rights transfer in transit trade, such as requiring notarization, the cargo rights transfer agreement will be deemed invalid if not notarized. It is recommended to review all clauses before signing the letter of credit, delete the soft clauses that cannot be satisfied, and sign a notarized cargo rights preservation agreement with the transit agent.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-6", "datePublished": "2026-08-13T18:09:25Z", "author": {"@type": "Person","name": "Daniel Xu","url": "https://www.sh-zhongshen.com/en/team/daniel-xu/"} } , { "@type": "Answer", "text": "The on-site inspection risks of transit trade are mainly concentrated in the customs inspection links at the transit port and the destination port. During transit port inspection, if the packaging and markings of the goods do not meet the transit requirements of the transit country, such as not pasting the temporary transit label of the transit country, the enterprise will be required to rectify, generating high container unpacking fees and rectification fees, and even be prohibited from transit; during destination port inspection, if the customs find that the origin markings of the goods do not match the transit trade documents, such as still retaining the Chinese origin label, it will be judged as fake transit trade, and the goods will be detained; in addition, if the authenticity of the seal cannot be verified during inspection, the customs will suspect that the goods have been tampered with, requiring full container unpacking inspection, generating high costs. It is recommended to shoot the entire process of seal application during container swapping, retain the seal number and photos, and submit the complete transit trade documents to the customs in advance at the destination port to apply for pre-review.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-7", "datePublished": "2026-08-13T18:00:57Z", "author": {"@type": "Person","name": "Michael Zhang","url": "https://www.sh-zhongshen.com/en/team/michael-zhang/"} } , { "@type": "Answer", "text": "The packaging risks of transit trade mainly involve cargo safety and compliance during transit and transportation. If the goods are dangerous goods, such as lithium batteries in electrical and mechanical products, and UN dangerous goods packaging is not used as required by the transit country and the destination country, the goods will be detained by the transit port customs, required to repackage, generating high packaging fees and port detention fees; second, if the moisture-proof and reinforced packaging of the goods is not in place, the goods are prone to damage during container swapping, leading to the buyer's refusal to accept the goods and generating return fees; in addition, if the required Material Safety Data Sheet (MSDS) reports are not provided, the logistics agent at the transit port cannot handle transit record, making it impossible for the goods to transit. It is recommended to select a qualified packaging enterprise to package the goods according to the packaging requirements of the transit country and the destination country before shipment, and retain both electronic and paper versions of the MSDS reports.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-8", "datePublished": "2026-08-13T18:00:53Z", "author": {"@type": "Person","name": "Lucas Liu","url": "https://www.sh-zhongshen.com/en/team/lucas-liu/"} } , { "@type": "Answer", "text": "The tax refund risks of transit trade mainly involve confusing transit trade with general trade in tax refund declaration. Many enterprises incorrectly declare export tax refund for transit trade goods as general trade, which will be recognized as false tax refund by the tax authorities, required to repay the refunded tax and late fees, and trigger tax investigation. If the complete transit trade documents, such as transit country bills of lading, warehousing certificates and purchase and sales contracts, cannot be provided, a fine equal to the amount of the refunded tax will be imposed, and even the export tax refund qualification will be revoked; in addition, if the capital flow and cargo flow of transit trade do not match, for example, the amount of capital receipt and payment does not match the purchase and sales amount of the goods, the tax authorities will recognize it as "four flows inconsistent", and suspend the enterprise's export tax refund declaration authority. It is recommended to clarify that transit trade goods are not applicable to export tax refund before declaration, and conduct separate accounting treatment to avoid confusion with general trade.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-9", "datePublished": "2026-08-13T17:57:33Z", "author": {"@type": "Person","name": "Andy Guo","url": "https://www.sh-zhongshen.com/en/team/andy-guo/"} } , { "@type": "Answer", "text": "The supply chain risks of transit trade mainly involve full-link cost control and structural rationality. Many enterprises do not accurately calculate the full-link costs of transit trade, such as transit port warehousing fees, container swapping fees and tariffs, resulting in negative final profits; second, the appropriate transit country is not selected, for example, the trade barriers between the transit country and the destination country are high, which will lead to the destination country customs imposing high tariffs on the goods; in addition, the trade terms for transit trade are improperly selected, such as using FOB terms without clarifying the responsibility division of the transit port, which will result in the seller bearing the transit port fees and increasing costs. It is recommended to conduct a comprehensive investigation of the transit country's trade policies, logistics costs and tariffs before carrying out transit trade, select a transit country with a free trade agreement with the destination country, and use CIF terms to clarify the responsibility division of the transit port, and include transit costs in the quotation system.", "upvoteCount": 0, "url": "https://www.sh-zhongshen.com/en/qa/transit-trade-core-risks-identification-key-operational-links-screening.html#suggestedAnswer-10", "datePublished": "2026-08-13T17:55:21Z", "author": {"@type": "Person","name": "Kevin Lin","url": "https://www.sh-zhongshen.com/en/team/kevin-lin/"} } ] } }, { "@context": "https://schema.org", "@type": "BreadcrumbList", "itemListElement": [ {"@type": "ListItem", "position": 1, "name": "Home", "item": "https://www.sh-zhongshen.com/en/"},{"@type": "ListItem", "position": 2, "name": "Q&A", "item": "https://www.sh-zhongshen.com/en/qa/"},{"@type": "ListItem", "position": 3, "name": "Entrepôt Trade Q&A", "item": "https://www.sh-zhongshen.com/en/qa/cat-entrepot-trade/"} ,{"@type": "ListItem", "position": 4, "name": "What core risks are hidden in the entire transit trade chain? What key links do enterprises need to focus on screening?"} ] } ] ```