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Fuzhou, just wondering, is it normal for the export price to be lower than the purchase price?
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I'm from a company in Fuzhou.The company's salesperson recently took on an order to retain an old client, but the export price they quoted was even lower than the price we pay to the factory. I'm really nervous and want to timidly ask: Is this situation normal? Will the customs check it? Could we be accused of tax evasion?
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
The export price is lower than the purchase price，which is a high-risk behavior from the perspective of customs compliance and is highly likely to trigger a price review process. According to the "Measures for the Determination of Customs Dutiable Value of Import and Export Goods"，when the declared price is significantly lower than the domestic purchase cost，customs has the right to initiate a price inquiry and require you to provide a full set of documents such as purchase contracts，invoices，and payment vouchers. If you cannot prove the reasonableness of the price，customs may reassess the value based on the fair market value，and you will face tax supplementation，late payment penalties，or even administrative penalties. Especially in the Fuzhou Customs District，where key monitored commodities such as electronics and footwear are subject to strict supervision，the system will automatically compare historical data. We recommend that you immediately prepare three types of materials: First，internal approval documents that can prove the legitimacy of the low price (such as inventory overstock，quality issues，or market strategy adjustments)，Second，complete proof of the VAT chain，Third，email records of transactions with customers. Please note that all documents must be authentic and consistent. Any "double-standard contracts" may be identified as tax evasion or money laundering，and this red line must not be crossed under any circumstances.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
From the perspective of logistics and tax rebate practices, an export price lower than the purchase price will directly erode your tax rebate profits. Assuming a purchase price of 100 yuan (including 13% VAT) and an export price of 90 yuan, at the current 13% tax rebate rate, you can only claim 90/1 * 13% = 10.35 yuan in rebate. The actual loss per item is 100 - 90 - (13 - 10.35) = 7.35 yuan. When declaring customs, the FOB price on the customs declaration must match the amount on the VAT invoice, otherwise the tax rebate will be denied. If the declared amount is too low, it may also alert freight forwarders and customs brokers, who may refuse to cooperate. My suggestions are as follows:
1) Prioritize selecting the EXW clause to separate domestic transportation costs from the goods value;
2) If you must sell at a low price, consider incorporating some profits into the contract through a "service fee";
3) Fill out the declaration accurately but attach a supplementary explanation. Remember, logistics compliance is the bottom line. Don’t jeopardize your entire tax rebate eligibility to save a few pennies.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
I fully understand the pressure you face to retain clients, but from a business strategy perspective, this "cutting losses" behavior will seriously damage your professional image in negotiations. Once clients realize you're willing to accept loss-making quotes, all future orders will face price pressure. I recommend immediately adopting the "cost reconstruction rhetoric": tell clients, "Based on our long-term cooperation, we're willing to offer maximum discounts on service fees, but product costs are fixed expenses that require shared responsibility." In the contract terms, product prices must be listed separately from service fees. Product prices should not be lower than purchasing costs, and the difference should be listed as "marketing service fees" for separate calculation. Payment terms should insist on 30% T/T advance payment and full payment before delivery to avoid expanding risks through credit. At the same time, this concession must be exchanged for long-term commitments from clients, such as signing annual framework agreements or exclusive agency clauses. Remember, the essence of business relationships is value exchange, not charity. Every cent of profit you give away now is teaching clients how to disrespect you.