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Trade Q&A
What exactly is entrance entrepot trade? What are its core operation logic and applicable scenarios?
or complex compliance issues.
clearance and fund security.
I am a foreign trade salesperson at a company specializing in precision mechanical parts in Shanghai. Last week, I received a large order from a long-term Southeast Asian customer we have cooperated with for 3 years. The customer explicitly required the operation to follow the entrance entrepot trade mode, claiming it can avoid high tariff barriers in the destination country.
I have only been exposed to ordinary import and export and direct entrepot trade before, and have no idea about entrance entrepot trade at all. The information I found online is inconsistent: some say it is essentially the same as entrepot trade, while others say it involves core operations of domestic bonded warehouses. I am extremely anxious now.
If I get the operation mode wrong, it will not only lead to container detention at the port, customs inspection and detention, resulting in huge port detention fees and fines, but also may make me completely lose this key customer whose annual order volume exceeds 5 million yuan. I would like to ask what exactly entrance entrepot trade means? What is the essential difference between it and ordinary entrepot trade?
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
First of all，we need to correct a common industry misunderstanding: many practitioners confuse entrance entrepot trade with ordinary entrepot trade and transit trade，mistakenly thinking that the only difference lies in the transit port. In fact，the core of entrance entrepot trade is that goods will first enter the domestic bonded supervision area，complete operations such as document exchange and cargo right transfer before exiting the country. By contrast，goods under ordinary entrepot trade do not enter China's customs territory throughout the whole process，while transit trade only means goods pass through China's customs territory without any commercial operations.
If entrance entrepot trade is mistakenly operated as ordinary entrepot trade，it will trigger a chain of negative reactions: after the goods arrive at the domestic port，they cannot enter the bonded warehouse，and the customs will require formal declaration according to general trade，resulting in high tariffs and value-added tax. If the enterprise fails to pay the taxes and fees or provide compliant documents in time，the goods will be detained forcibly after being detained at the port for more than 7 days. This will not only incur daily port detention fees and container detention fees of thousands of yuan，but also delay the delivery time limit to the destination country，trigger breach of contract claims from customers，and even lead to the enterprise being included in the customs credit early warning list，affecting all subsequent foreign trade businesses.
Physical risk isolation measures must target bonded warehouses with first-class customs supervision qualification to ensure that after goods enter the exclusive supervision area，they are physically isolated from domestic general trade goods，and special personnel are responsible for cargo right control and document follow-up to avoid mixed goods or illegal circulation.
Exclusive loss reduction tips: Entrust a professional agent to complete the pre-audit of documents 3 working days in advance to confirm the compliance of transit contracts，bill of lading endorsements and certificates of origin. At the same time，sign an operation guarantee agreement. If losses such as port detention and customs detention are caused by the agent's operation errors，the agent shall bear full liability for compensation. If customers temporarily change their demands，the transit route can be adjusted within 24 hours to ensure smooth business operation.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
The customs declaration for entrance entrepot trade shall strictly follow the two-step operation process of "inward bonded declaration + outward entrepot declaration". When entering the country, documents such as bonded warehouse warehousing application form, transit trade contract, and copy of ocean bill of lading shall be submitted to the customs.
Special attention shall be paid to the price review link: the customs will verify the value-added part of the transit link. If the declared value-added amount is lower than 50% of the industry average, it will trigger a price review dispute, and the enterprise will be required to provide supplementary cost certificates for transit services (such as storage fee invoices and operation fee receipts).
If the declaration data is inconsistent with the actual goods, an application for deleting the declaration and resubmitting shall be submitted within 24 hours, and the enterprise shall cooperate with the customs to provide the cargo right transfer certificate from the third-party logistics provider to avoid being included in the customs key supervision list. In addition, it is necessary to ensure the logical closed loop of the data of inward and outward customs declarations, and avoid problems affecting customs clearance efficiency such as pending accounts and delayed declaration.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
For the logistics route of entrance entrepot trade, priority shall be given to routes that sail directly to the port where the domestic bonded warehouse is located, so as to avoid the risk of loss of control over cargo rights caused by transit through third-party ports. At the same time, the free storage period of the bonded warehouse shall be confirmed in advance. At present, the conventional free storage period of first-class supervision bonded warehouses in Shanghai is 14 days.
If extension is required, an application shall be submitted to the customs 7 working days in advance, otherwise a container detention fee of 200-500 yuan per container per day will be incurred. The bill of lading endorsement shall adopt the form of "indicative endorsement + designated endorsee", clarifying that the cargo right can only be transferred to the bonded warehouse operator or the designated buyer, so as to avoid the risk of cargo release without bill of lading. In case of container rolling by the shipping company, coordinate with the shipping company to change to the fastest shipping schedule of the same route at the first time, and notify the bonded warehouse to reserve the corresponding space to ensure that the goods can be directly stored after arriving at the port, so as to avoid port detention fees.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
Entrance entrepot trade falls under the category of bonded supervision. The circulation of goods in domestic bonded warehouses does not require payment of tariffs and value-added tax for general trade imports. However, if service fees such as storage fees and operation fees are incurred during the transit process, the enterprise shall obtain compliant special value-added tax invoices for input tax deduction.
In addition, with the help of the VAT deferral policy, the value-added tax payment obligation in the exit link can be deferred until the customs declaration in the destination country, reducing the capital occupation cost of the enterprise. Attention shall be paid to the pricing compliance of cross-border related party transactions.
If the value-added rate of the transit link is lower than the industry average (the current transit value-added rate of the foreign trade industry is about 8%-12%), it may trigger a BEPS investigation. It is recommended to entrust a third-party institution to issue a pricing rationality report in advance to avoid tax risks.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The collection and payment of foreign exchange for entrance entrepot trade shall strictly follow the principle of "three streams consistency", that is, the capital flow, cargo right flow and document flow are completely matched. It is recommended to complete the foreign exchange collection and payment operations through the CIPS RMB cross-border payment system to improve the timeliness of fund arrival and compliance. When collecting foreign exchange, materials such as transit trade contract, bonded warehouse warehousing certificate, and copy of ocean bill of lading shall be submitted to the bank.
If there is a difference between the received foreign exchange amount and the contract agreement (such as the difference caused by exchange rate fluctuations), a difference explanation letter shall be submitted to avoid being included in the bank's foreign exchange supervision early warning list. If an offshore account is used for foreign exchange collection and payment, it is necessary to ensure that each fund is supported by corresponding transaction documents to avoid the account being frozen or restricted due to "funds of unknown origin".
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
The transit contract for entrance entrepot trade shall clearly stipulate the node of cargo right transfer. It is recommended to take "the goods entering the domestic bonded supervision area and completing the warehousing acceptance" as the sign of cargo right transfer, so as to avoid disputes caused by ambiguous ownership of cargo rights. A force majeure guarantee clause shall be included in the contract.
If delivery delay is caused by unforeseen factors such as customs policy adjustment, port congestion and extreme weather, the liability for breach of contract of both parties can be exempted. If the letter of credit settlement method is adopted, the terms of the letter of credit shall be strictly reviewed to avoid unfulfillable soft clauses such as "requiring submission of general trade import declaration form". At the same time, the intellectual property customs protection filing shall be completed in advance to avoid the goods being detained by the customs due to suspected infringement.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
After the goods of entrance entrepot trade arrive at the port, the customs may randomly conduct unpacking inspection. At this time, documents such as cargo list, certificate of origin, and MSDS (if the goods are dangerous goods or precision equipment) shall be prepared in advance to cooperate with the inspection of the inspectors, so as to avoid inspection delay caused by incomplete documents. The authenticity identification of seals shall be completed by personnel with professional qualifications.
If the seal is found to be damaged or inconsistent with the record on the bill of lading, the shipping company shall be notified immediately to replace the seal, and all evidence shall be retained by taking photos, so as to avoid being deemed that the cargo right has been illegally tampered with. If the inspection result is inconsistent with the declaration data, the inspection report issued by a third-party identification institution shall be submitted within 3 working days to apply for re-declaration or data modification, so as to avoid administrative punishment.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
If the goods under entrance entrepot trade are precision mechanical parts, a packaging scheme that meets international transportation standards shall be adopted. It is recommended to adopt the combination of "vacuum moisture-proof packaging + buffer foam filling + solid wood pallet reinforcement" to avoid damage caused by vibration and moisture during transit and storage.
If the goods involve dangerous goods, special packaging containers with UN certification shall be adopted, and MSDS documents that meet the requirements of Chinese customs and the customs of the destination country shall be prepared, clarifying the composition, hazards, emergency treatment measures and other information of the goods, so as to avoid customs detention due to unqualified packaging or MSDS. The buffer packaging materials shall be environmentally friendly and recyclable, so as to avoid being rejected or incurring additional disposal costs due to the environmental protection policy requirements of the destination country.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
Entrance entrepot trade is not within the applicable scope of export tax rebate, because the goods do not enter the domestic general trade circulation field, so enterprises cannot apply for export tax rebate. However, the special value-added tax invoices corresponding to service fees such as storage fees and operation fees incurred during the transit process can be used for the enterprise's input tax deduction.
It is necessary to strictly control the "four streams consistency", that is, the capital flow, cargo right flow, document flow and contract flow are completely matched, so as to avoid triggering tax letter adjustment due to data inconsistency. In case of cross-month declaration, a written explanation shall be submitted to the tax authority in advance to clarify the authenticity and compliance of the business, so as to avoid being identified as illegal operation. In addition, all transaction documents shall be properly kept for a retention period of no less than 5 years for inspection by the tax authority.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
The supply chain planning of entrance entrepot trade shall link the inventory of domestic bonded warehouses with the customer demand of the destination country, adopt the JIT (Just In Time) inventory strategy to reduce inventory occupation costs. At the same time, a cost actuarial model shall be established, covering the costs of all links such as transit fees, storage fees, customs declaration fees and logistics fees, and compare the costs with those of ordinary entrepot trade to select the optimal trade mode.
Attention shall be paid to the conversion of trade terms. Entrance entrepot trade generally adopts the terms of "CIF domestic bonded warehouse" or "FOB transit port" to clarify the responsibilities and obligations of both the buyer and the seller, so as to avoid disputes caused by unclear division of responsibilities. In addition, a supply chain risk early warning mechanism shall be established to monitor information such as port congestion and customs policy adjustment in real time, and adjust the transit route in advance to ensure smooth business operation.