Whether issuing letters of credit via NRA accounts falls under the category of entrepot trade
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I am a financial staff of a foreign trade enterprise mainly engaged in direct export trade to Southeast Asia. In 2026, we plan to use offshore NRA accounts to issue letters of credit to overseas consignees of goods purchased from domestic suppliers.
Recently, I heard from peers that issuing L/Cs via NRA accounts may be regarded as entrepot trade, requiring additional submission of full sets of entrepot trade documents. Our business is that after domestic factories purchase goods, they are directly shipped to overseas customers without transiting through third countries for warehousing or transfer of ownership.
Now I am confused: does issuing L/Cs via NRA accounts count as entrepot trade? If not, what documents do we need to prepare to prove the authenticity of the business? Will the bank refuse payment due to document discrepancies or will SAFE conduct inspections?
DanielYears of service：8Customer Rating：5.0
Legal AdvisorStart a Chat
NRA accounts (Non-Resident RMB Accounts) issuing letters of credit are not directly equivalent to entrepot trade. The core judgment criteria are the path of cargo rights circulation and the authenticity of trade background，not the account type.
If your business is to purchase goods domestically and ship them directly to overseas end customers without transiting through third countries for warehousing or transfer of cargo rights，and only use NRA accounts for cross-border payments and receipts，in this case，issuing L/Cs via NRA accounts is a routine cross-border settlement，and there is no need to submit full sets of entrepot trade documents as required for entrepot trade. However，complete cargo rights supporting documents such as domestic purchase contracts，overseas sales contracts，bills of lading，packing lists，etc. must be retained to ensure consistency of capital flow，cargo flow，and document flow.
Note the latest cross-border settlement inspection rules of SAFE in 2026: if the trade corresponding to L/C issuance via NRA accounts involves the transfer of cargo rights in an overseas intermediate link，it will be regarded as entrepot trade，and additional documents such as transit warehousing certificates and entrepot middleman agreements must be provided. If there are document discrepancies or missing cargo rights certificates，it may trigger bank refusal to pay or on-site inspections by SAFE. It is recommended to confirm the local settlement requirements with the opening bank in advance，and retain electronic vouchers of the entire logistics track for future inspections.
In addition，some regional banks will conduct pre-approval on the trade type of L/C issuance via NRA accounts. It is recommended to submit the full set of trade background documents to the bank for pre-approval before issuing L/Cs to avoid settlement delays caused by incorrect information filling. If you are subsequently inspected by the regulatory authorities，you can quickly complete the compliance explanation with complete cargo rights supporting documents.
EllaYears of service：10Customer Rating：5.0
Senior Financial AdvisorStart a Chat
The judgment of NRA L/C issuance and entrepot trade needs to be combined with customs valuation and cargo rights track inspection. In 2026, the customs clearance system has achieved data linkage across all ports in China. If the goods settled via NRA L/C issuance by your company are not declared through third countries and are only shipped directly from domestic ports to overseas, the customs will not classify this business as entrepot trade.
However, note that if the bill of lading shows a transit port and no certificate of non-discharge is provided, it may be marked as suspected entrepot trade in the system. In this case, it is necessary to submit supporting documents such as value-added tax invoices for domestic purchases and domestic warehousing records to prove that the cargo rights have not undergone third-party transfer. In addition, the customs declaration code for entrepot trade is "1110", while the code for direct export is "0110".
If your business meets the requirements of direct export, you must ensure that the trade method selected on the customs declaration form is correct, to avoid inconsistencies between subsequent documents and settlement information caused by incorrect codes. It is recommended to submit the L/C contract via NRA accounts and customs declaration documents to the customs for pre-approval before cargo declaration, to eliminate compliance risks in advance.
RobertYears of service：6Customer Rating：5.0
Warehouse Management AdvisorStart a Chat
Logistics track is one of the core bases for judging whether NRA L/C issuance belongs to entrepot trade. In 2026, global shipping data has been connected to the foreign exchange settlement system in real time. If the port of loading on the bill of lading is a domestic port, the port of discharge is the location of the overseas end customer, and no unloading records at any intermediate ports are shown, this can prove that the business is direct export rather than entrepot trade.
If your company uses NRA accounts to issue L/Cs, you must ensure that the shipper and consignee information on the bill of lading is consistent with the contract subject, and retain electronic vouchers of the entire logistics track, including sea waybills, manifest information etc. If there is a need for transit but no actual discharge, apply to the shipping company for a "Certificate of Non-Discharge" to avoid logistics data being used as supporting materials for judging entrepot trade. In addition, it is recommended to choose direct shipping routes to reduce the probability of entrepot trade inspections automatically triggered by the system.
JohnYears of service：6Customer Rating：5.0
Export Tax Rebate AdvisorStart a Chat
From the perspective of tax, the tax treatment of NRA L/C issuance is directly related to the trade type. If it is a direct export business, you can enjoy the export tax refund policy in accordance with the normal export process, without paying value-added tax and surtax. If it is identified as entrepot trade, you need to pay withholding income tax at the rate of 10% (latest policy in 2026) as cross-border service income of non-resident enterprises.
The core of tax judgment for entrepot trade is whether the cargo rights are transferred overseas. If the ownership of your company's goods does not pass through third-party middlemen and is only shipped directly from domestic to overseas, the tax authority will not classify this business as entrepot trade.
However, you must retain documents such as contracts and cargo rights transfer certificates to deal with tax correspondence inspections. In addition, direct export business settled via NRA accounts can enjoy tax preferences for cross-border RMB settlement, without the need for foreign exchange verification process.
WilliamYears of service：10Customer Rating：5.0
International Logistics AdvisorStart a Chat
Cross-border payment and receipt compliance is the key to judging whether NRA L/C issuance meets the requirements of entrepot trade. In 2026, Cross-Border Interbank Payment System (CIPS) has been connected to the SAFE monitoring system in real time. If the funds for L/C issuance via NRA accounts come from overseas non-resident enterprises, and the corresponding goods are shipped directly from domestic to overseas, SAFE will not identify this business as entrepot trade.
However, note that if the funds for L/C issuance come from domestic affiliated enterprises, you need to provide affiliated transaction certificates to avoid being identified as false trade. In addition, payments and receipts for entrepot trade need to meet the requirements of "offshore account payments and receipts".
If your company uses NRA accounts to issue L/Cs and the settlement funds do not pass through domestic accounts, this can exclude the compliance risk of entrepot trade. It is recommended to submit complete trade background documents including purchase contracts, sales contracts, bills of lading, etc. to the opening bank before issuing L/Cs to ensure the success of the bank's settlement review.
EmilyYears of service：3Customer Rating：5.0
Client Success AdvisorStart a Chat
From a legal perspective, the contract terms of NRA L/C issuance must clearly state the trade type to avoid being identified as entrepot trade. If your business is direct export, you must clearly state in the L/C that "goods are shipped directly from China to overseas consignees", and indicate the time and location of cargo rights transfer in the sales contract as domestic ports.
If there are terms related to "entrepot" in the L/C, timely communicate with the L/C applicant to modify them to avoid subsequent document discrepancies. In addition, in case of inspections by SAFE or customs, timely provide supporting materials to prove the authenticity of the business to avoid legal liability. It is recommended to sort out complete trade background documents before signing the contract to ensure that the contract terms meet compliance requirements.
CharlotteYears of service：4Customer Rating：5.0
Currency Exchange AdvisorStart a Chat
Document review for export tax refund is an important link in judging whether NRA L/C issuance business belongs to entrepot trade. In 2026, the export tax refund system has realized automatic comparison of data with customs and SAFE. If your company's direct export business settled via NRA accounts retains complete documents such as special value-added tax invoices for domestic purchases, export goods customs declaration forms, and receipt vouchers, you can normally handle export tax refunds.
If it is identified as entrepot trade, you cannot enjoy the export tax refund policy and must declare taxes as required. In addition, the review of export tax refund for entrepot trade requires providing transit port warehousing certificates, invoices of entrepot middlemen, etc. If your company does not have such documents, timely explain the situation to the tax authority and provide other supporting materials. It is recommended to submit relevant documents for NRA L/C issuance to relevant departments for pre-approval before handling tax refunds to eliminate problems in advance.