---
title: "What tax categories are involved in transit trade, and what is the full process of compliant declaration and payment?"
description: "When carrying out transit trade，enterprises often face problems such as double taxation，compliance risks and even blocked customs clearance due to vague understanding of tax categories and declaration processes. It is necessary to first clarify the tax scope of transit trade，strictly follow the full-chain compliance process of document review and node connection. By verifying the transaction background in advance and matching the tax rules corresponding to the settlement method，enterprises can e..."
url: "https://www.sh-zhongshen.com/en/qa/transit-trade-tax-categories-compliant-filing-payment-process.html"
language: "en"
type: "Q&A"
category: "Entrepôt Trade Q&A"
datePublished: "2026-06-27"
dateModified: "2026-06-27"
brand: "Zhongshen Trading China"
answerCount: 8
---

# What tax categories are involved in transit trade, and what is the full process of compliant declaration and payment?

## Question

 I am the head of an enterprise in Shanghai specializing in transit trade of industrial electromechanical equipment. Last month, I just completed an order procured from Germany and transshipped to Singapore via Hong Kong. As a result, the goods were detained by Singapore Customs for 3 days due to incorrect tax declaration category, resulting in 27,000 yuan of port demurrage and cabin rental, and I almost had to pay liquidated damages to long-term customers. Now I have three similar orders on hand, involving euro and RMB settlement methods. I really cannot figure out what taxes need to be paid for transit trade, whether there are special provisions on payment rules under different settlement methods, how to completely avoid the double taxation pit I encountered before, and whether there are other tax-related misconceptions I have not noticed. I am really running around anxiously all day, afraid that another problem will ruin the company's 12-year reputation. 

## Answers
                            
### Answer 1 — Best Answer

First，carry out pre-document review. The core materials to be verified include transit trade contracts，upstream and downstream bills of lading (it should be clear that the goods only stop at the transit port and do not enter the domestic territory)，payment/receipt slips，and goods certificate of origin. The focus is to **confirm that the "transit" mark on the bill of lading is clear，so as to avoid being identified as general trade import**.

For core node connection，you need to submit the transit trade filing application to the transit port customs 3 working days before the goods arrive at the transit port，and simultaneously declare the "non-taxation for cross-border taxable activities" filing to the domestic tax authority，if euro settlement is adopted，you need to submit the foreign exchange payment filing form of the State Administration of Foreign Exchange，if RMB settlement is adopted，you need to submit the CIPS system settlement message，**to ensure the consistency of tax，customs and foreign exchange data**.

For abnormal contingency plans，if there is an objection to the tax declaration category，you need to submit the manifest record of goods not entering the country and the transit warehousing agreement to the customs within 24 hours，and contact the tax authority to start the review process at the same time，if double taxation is involved，you can apply for tax credit to the domestic tax authority with the overseas tax payment certificate.

For final compliance implementation，you need to file the full set of documents for future reference within 15 working days after the completion of transit，**and update the enterprise's cross-border trade tax ledger simultaneously**，so as to ensure that it can be accessed at any time during subsequent tax verification.

**status:** accepted
**Author:** Eric Zhou
**Date:** 2026-06-27

### Answer 2

The core of tax declaration for transit trade is to clarify the attribute that "goods do not enter the domestic customs territory". When declaring customs, you need to check "transit trade (0110)" in the "trade mode" column, and mark the country of origin, destination country and transit port information of the goods in the "remarks" column at the same time. If you mistakenly select the general trade mode during declaration, the goods will be judged as imported goods, and you need to pay import tariff, value-added tax and consumption tax.

Subsequent adjustment needs to be applied through order deletion and re-declaration, but it will cause at least 3 working days of customs clearance delay, and may also trigger customs valuation verification. In addition, if the transit port is Hong Kong, you need to additionally submit the "Confirmation of Transshipped Goods" issued by Hong Kong Customs, to avoid being identified as domestic import and re-export, so as to avoid the risk of double taxation.

**status:** suggested
**Author:** Grace Wang
**Date:** 2026-06-27

### Answer 3

The logistics path of transit trade directly affects tax payment. You should choose the "direct transit" mode, that is, after the goods arrive at the transit port, they do not enter the bonded warehouse and directly change ships for departure. Under this mode, the transit port only charges terminal operation fees, and no import tax is required.

If you need to enter the bonded warehouse of the transit port due to tight shipping space, you need to apply for bonded warehousing filing to the transit port customs in advance. No tax is required during the storage period, but you need to complete the ship change and departure within 14 days, otherwise the goods will be regarded as imported goods, and you need to pay demurrage and import tax. In addition, the bill of lading should adopt the "order bill of lading" to avoid disputes over the tax payment subject caused by unclear transfer of cargo rights, and you need to clearly mark "for transit only, not for domestic consumption" on the bill of lading.

**status:** suggested
**Author:** Evelyn Li
**Date:** 2026-06-27

### Answer 4

The taxes involved in transit trade mainly include terminal operation tax at the transit port and stamp duty in the domestic territory. If the goods generate value-added services such as warehousing and loading and unloading at the transit port, you also need to pay value-added tax at the transit port. It should be noted that the income obtained by domestic enterprises from transit trade should be included in the taxable income of enterprise income tax, but no value-added tax is required, because transit trade does not belong to domestic taxable activities.

If cross-border related transactions are involved, you need to formulate reasonable transfer pricing in accordance with BEPS rules, to avoid being identified as profit transfer by the tax authority, thus triggering anti-tax avoidance investigation. In addition, if RMB settlement is adopted, you can enjoy the "cross-border RMB settlement tax preferential filing" policy of the domestic tax authority, which simplifies the tax declaration process.

**status:** suggested
**Author:** Linda Gao
**Date:** 2026-06-27

### Answer 5

The compliance of payment and receipt of foreign exchange in transit trade directly affects tax payment. You need to ensure that the amount of foreign exchange received and paid is consistent with the amount of the transit trade contract, and avoid capital return or differential payment and receipt of foreign exchange, otherwise it will be identified as an abnormal transaction by the State Administration of Foreign Exchange and trigger tax verification.

If SWIFT settlement is adopted, you need to fill in "121010 (transit trade receipts and payments)" in the "transaction code" column of the message; if CIPS system is used for RMB settlement, you need to mark "transit trade" and goods information in the "postscript" column. In addition, for transit trade with foreign exchange received in offshore accounts, you need to submit the transaction flow of the offshore account and corresponding documents to the domestic tax authority within 10 working days after receiving the foreign exchange, to avoid tax-related risks caused by failure to declare.

**status:** suggested
**Author:** Daniel Xu
**Date:** 2026-06-27

### Answer 6

The contract terms of transit trade need to clarify the subject and responsibility of tax payment. You need to agree in the contract that "the goods are only for transit and shall not enter the consumer market of the domestic territory or the transit port", and at the same time clarify that upstream and downstream customers need to provide real documents such as goods certificate of origin and bill of lading, to avoid disputes over tax payment responsibility caused by false documents.

In case of customs detention of goods, tax payment and other situations, you need to agree on the coverage of force majeure clauses in the contract, and clarify that losses caused by false documents provided by customers shall be borne by customers. In addition, you need to clarify the cargo right transfer terms of transit trade, to avoid disputes over the tax payment subject caused by unclear transfer of cargo rights. If necessary, you can apply for a bank letter of guarantee to ensure the capital security of tax payment.

**status:** suggested
**Author:** Lucas Liu
**Date:** 2026-06-27

### Answer 7

The on-site inspection of transit trade is mainly concentrated at the transit port. If the goods are selected for inspection by the transit port customs, you need to prepare documents such as transit trade contract, upstream and downstream bills of lading, certificate of origin and other documents in advance, and explain the transit attribute of the goods to the customs at the same time, to avoid being misjudged as imported goods.

During inspection, you need to pay attention to the packaging and marking of the goods to ensure that there is no domestic address or brand information marked on the packaging, so as to avoid being identified as domestically produced goods. If the customs requires unpacking inspection, you need to cooperate with the customs to complete the goods inspection, and keep the inspection records and photos as supporting materials for subsequent tax declaration. In addition, if the transit port customs requires to pay a deposit, you need to apply for a refund within 10 working days after the completion of the inspection, to avoid capital occupation costs.

**status:** suggested
**Author:** Jason Wu
**Date:** 2026-06-27

### Answer 8

Transit trade does not fall into the scope of export tax rebate. You need to pay attention to distinguish the documents from those of general trade export, to avoid wrong tax rebate declaration caused by document confusion. Documents for transit trade should be filed separately, including transit trade contracts, upstream and downstream bills of lading, payment and receipt slips of foreign exchange, tax filing forms, etc., to avoid being mixed with documents for export tax rebate, thus triggering tax correspondence adjustment.

If an enterprise carries out general trade export and transit trade at the same time, it is necessary to establish a separate transit trade ledger, clearly distinguish the income, cost and tax of the two trade modes, to avoid wrong income tax declaration caused by account confusion. In addition, you need to separately declare the income and cost of transit trade during the annual enterprise income tax final settlement, to ensure the compliance of tax declaration.

**status:** suggested
**Author:** Cindy Chen
**Date:** 2026-06-27

## 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/)

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