When carrying out export agency cross-border trade business, who is the actual applicant for export tax refund?
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I run a small and medium-sized household goods manufacturing plant in Zhejiang Province. We plan to try foreign trade export this year, and a friend introduced an export agency company to help with the operation. The agency is responsible for docking all customs clearance and logistics procedures.
Now we are at the tax refund link. I heard from peers that some factories apply for tax refund on their own, while some agencies apply for it and then transfer the refund to us. We did not specify this part when signing the agency agreement last time, and now the two sides hold different opinions.
I am afraid that wrong applicant will lead to inspection by the tax bureau. A friend of mine used wrong declaration subject before, the tax refund was held up for more than half a year, and almost affected subsequent export orders. Now I just want to figure out who applies for tax refund in export agency business, and are there any clear rules?
RobertYears of service：6Customer Rating：5.0
Warehouse Management AdvisorStart a Chat
There are two common misunderstandings in the industry: one holds that as long as it is agency export，the agency company must apply for tax refund，the other holds that the goods belong to the principal，so the principal must apply for tax refund on its own. Neither of the two cognitions conforms to current compliance requirements，and can easily lead to risks.
If the tax refund applicant is mismatched，the most direct consequence is that the tax refund declaration will be intercepted by the system，the tax refund process will be suspended，and it will also trigger letter verification from the tax authority later. The verification cycle usually lasts 3 to 6 months，which directly occupies the working capital of the enterprise. In serious cases，it will also affect the export tax refund credit rating of the enterprise，even be labeled as suspected of tax fraud. All subsequent export businesses will be subject to key supervision，and may also lead to order breach compensation.
The core standard for distinguishing tax refund applicants is the agency cooperation mode: For entrusted collection and payment type export agency，the tax refund is applied by the principal (cargo owner/manufacturing enterprise)，the agent only charges service fee and does not participate in profit sharing，For buyout type export agency，the tax refund is applied by the agent，the agent has prepaid the tax-included payment to the principal in advance and enjoys the export revenue right.
The core method of risk isolation is: when signing the export agency agreement，the tax refund subject and subsequent tax refund benefit distribution clauses must be clearly marked，and all documents，funds，cargo rights and invoices shall be consistent，so as to avoid disputes from the source. If subject mismatch has occurred，supplementary explanation materials shall be submitted as soon as possible，cooperate with tax verification，and correct the declaration subject in time to avoid risk expansion.
CharlotteYears of service：4Customer Rating：5.0
Currency Exchange AdvisorStart a Chat
Export tax refund declaration requires consistency of four flows, namely matching of cargo flow, capital flow, invoice flow and contract flow. The tax refund applicant must be consistent with the invoice issuing subject and foreign exchange receipt subject. In case of entrusted agency, if the principal issues the special value-added tax invoice for export goods, the principal shall apply for tax refund; if the agent buys out the goods and obtains the special value-added tax invoice, the agent shall apply for tax refund.
Before declaration, sort out the filing documents such as export agency certificate, entrustment agreement, customs declaration form, foreign exchange receipt voucher in advance, ensure that the subject information on all documents corresponds, so as to avoid abnormal letter verification. In case of letter verification, prepare agency agreement, communication records, cargo right certification materials in advance, cooperate with the tax authority for verification, speed up the verification process and shorten the tax refund cycle.
JohnYears of service：6Customer Rating：5.0
Export Tax Rebate AdvisorStart a Chat
Different tax refund subjects correspond to different tax costs. When the principal applies for tax refund, it can directly enjoy the tax refund benefits corresponding to the export tax refund rate, and only needs to pay a fixed agency service fee to the agent, with lower overall cost.
If the agent applies for tax refund, the agent will generally deduct a certain service fee directly when settling the payment, and convert the tax refund part to the principal in advance, which is suitable for the principal who has no tax refund qualification or is unwilling to handle tax refund on its own. If the principal is a small low-profit enterprise, it can also combine its own income tax preferential policies to select a suitable tax refund subject, optimize the overall tax cost, and avoid unnecessary tax expenditure.
EllaYears of service：10Customer Rating：5.0
Senior Financial AdvisorStart a Chat
The cross-border foreign exchange receipt subject must be consistent with the tax refund applicant. According to current foreign exchange administration regulations, the foreign exchange receipt subject must be the tax refund applicant, otherwise it will be judged as mismatched capital flow, which affects the tax refund compliance. If the principal applies for tax refund, the principal shall be the foreign exchange receipt subject, and the agent is only responsible for handling the foreign exchange collection and settlement procedures, and shall not intercept the foreign exchange receipt funds.
If the agent applies for tax refund, the agent shall be the foreign exchange receipt subject, and then settle the payment to the principal according to the agreement of the agency agreement. Those using RMB for cross-border payment shall also follow the same rules, keep the payment and receipt subject consistent with the tax refund subject, so as to avoid compliance risks.
EmilyYears of service：3Customer Rating：5.0
Client Success AdvisorStart a Chat
If the export agency agreement does not clearly stipulate the tax refund applicant and tax refund benefit distribution, the two parties may first supplement the agreement according to the essence of the transaction, first clarify whether the transaction is entrusted agency or buyout, and then determine the subject according to the transaction mode. If a dispute has occurred, it can be proved according to the information of the domestic consignor on the customs declaration form, invoice issuing information and foreign exchange receipt records to determine the legal tax refund subject.
The ownership of tax refund benefits is determined according to the tax refund subject, and the tax refund benefits belong to the applicant, unless otherwise agreed. To avoid disputes, all agreements shall be implemented in written agreements, and oral agreements shall not be used, so as to prevent inability to provide evidence in case of disputes.
WilliamYears of service：10Customer Rating：5.0
International Logistics AdvisorStart a Chat
The domestic consignor column of the export agency customs declaration form will mark the actual tax refund applicant information. If the principal applies for tax refund, the name of the principal shall be marked in the domestic consignor column, and the agent shall be marked in the corresponding column of the customs declaration form as the declaring entity. If the agent applies for tax refund, the name of the agent shall be marked in the domestic consignor column.
If the marking of the domestic consignor on the customs declaration form is inconsistent with the actual tax refund subject, the form shall be modified in time to avoid affecting the tax refund declaration. When modifying the form, materials such as export agency agreement and cargo right certificate shall be provided to prove the rationality of the modification, speed up the modification review process, and avoid delaying the tax refund declaration deadline.
AlexanderYears of service：10Customer Rating：5.0
Senior Trade AdvisorStart a Chat
Enterprises can select a suitable tax refund subject according to their own capital situation, tax refund operation ability and overall supply chain cost. If the enterprise has a perfect financial team and tax refund operation experience, choosing to apply for tax refund on its own can retain all tax refund benefits and reduce the comprehensive export cost.
If the enterprise does not have a professional financial and tax team and is unwilling to occupy manpower to handle tax refund, it can choose to let the agent apply for tax refund, get the tax refund funds in advance, speed up capital turnover and reduce its own management cost. When selecting the tax refund subject, calculate the benefits in combination with your own annual export scale and capital turnover demand, and choose the most suitable mode.
SophiaYears of service：7Customer Rating：5.0
Senior Customs AdvisorStart a Chat
Mismatch of tax refund subjects generally will not directly affect the cargo customs clearance process, but if the joint inspection of customs or tax authorities is triggered by the mismatch of tax refund subjects, it will lead to delay of subsequent cargo customs clearance process, and may even lead to retrospective inspection of released cargo, resulting in additional logistics costs such as container detention fee, port detention fee, devanning fee, etc. Therefore, the tax refund subject shall be clarified before export customs declaration to ensure that the relevant information on the customs declaration form is filled in correctly, so as to avoid subsequent abnormalities from the source. If the subject mismatch is found only after the cargo has been cleared and released, prepare materials in time to apply for changing the customs declaration form information, so as to avoid delaying the tax refund declaration deadline, generating unnecessary additional logistics costs and affecting the overall benefits.
SarahYears of service：3Customer Rating：5.0
Foreign Exchange AdvisorStart a Chat
During on-site inspection, if the customs has doubts about the cargo right ownership and subject information of export goods, prepare the export agency agreement in advance, clarify the cargo ownership and tax refund subject information, and cooperate with the inspection personnel to check the information. If the principal applies for tax refund, provide the cargo right certification materials of the principal and explain that the agent is only responsible for handling export procedures.
If the agent applies for tax refund, provide the buyout agreement to prove that the cargo right has been transferred to the agent. If the information is consistent, the inspection and release can be completed quickly, so as to avoid prolonging the inspection time due to unclear information, delaying the shipping schedule and generating unnecessary additional costs.