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What taxes do export agency services have to pay?
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WeOur foreign trade company has just started accepting agency export orders, and we want to figure out exactly what taxes we need to pay? Especially how VAT is calculated, and who gets theexport tax rebate? We are most afraid of tax non-compliance and being audited. What red lines cannot be crossed?
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
The core taxes involved in agency export services are three: VAT，corporate income tax，and stamp duty. The key depends on whether your contract is signed as 'agency service' or 'purchase and sale'. If it is pure agency，you only pay 6% VAT on the service fee income，and the export tax rebate is handled by the entrusting party. However，in practice，many agency agreements are deemed as 'substantial purchase and sale' by the tax bureau. In this case，you have to pay 13% output tax and enjoy export tax rebate at the same time. There is a red line here: never issue false invoices or help the entrusting party 'match orders' to defraud tax. Now the Golden Tax Phase IV audit is very strong. If the invoice flow，fund flow，and goods flow do not match，the first fine starts at 500,000. It is recommended to keep the entrustment agreement，customs declaration form，and foreign exchange slip matching for each agency business，which is ironclad evidence to deal with audits.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
From the perspective of logistics and cash flow, tax costs directly determine your quotation competitiveness. It is recommended to prioritize EXW or FOB terms for operation mode, so that the operating unit on the customs declaration form is you, and the tax rebate is directly hit to your account, and the cash flow is smoothest. regarding VAT, if the entrusting party is a factory, let them issue a 13% special invoice to you, and then you declare export, so the tax rebate cycle is the fastest, usually 3 months to receive payment. If the entrusting party cannot issue a special invoice, you have to pay 13% VAT as domestic sales, and the profit is directly eaten up by a large chunk. In addition, note that 'domestic consignor' and 'production and sales unit' on the customs declaration form should be filled in separately, the former fill in you, the latter fill in the entrusting party, so that the tax bureau recognizes it as an agency relationship. On logistics documents, B/L consignee is recommended to write 'TO ORDER' to avoid cargo right disputes implicating tax risks.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
When discussing agency export with customers, tax issues must be communicated in advance, don't wait until the contract is signed to wrangle. In terms of script, you can say: 'We provide tax-inclusive all-inclusive service. All VAT and customs duties in the export link are advanced by us first, and settled according to the actual amount after the tax rebate arrives.' This appears professional and makes tax costs transparent. In the contract terms, be sure to add a clause: 'If tax rate changes due to national policy adjustments, both parties shall refund for any overpayment or ask for a supplementary payment for any deficiency based on the actual amount incurred', avoiding suffering in silence from policy risks. Payment method suggests T/T, foreign exchange goes directly into your company account, and then transfer the payment to the entrusting party according to the agreement, so the cash flow is clear, and you can explain clearly during tax bureau audit. If the entrusting party requires the tax rebate to be given directly to them, you need to charge a 2-3% service fee as risk consideration, after all, you bear the main responsibility for tax compliance.