How to Declare Entrepot Trade Income in Compliance
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I am an operator of a foreign trade enterprise specializing in Southeast Asian entrepot trade. I have just taken two entrepot business deals recently, with goods transshipped from Malaysia to the EU. Now I have reached the income declaration stage and am completely at a loss. I have only done direct export before, knowing that I need to declare with a customs declaration form, but there is no domestic customs declaration form for entrepot trade. So how should I declare the income?
Moreover, the money is first transferred from EU buyers to our Hong Kong offshore account and then paid to Malaysian suppliers. The capital flow and title to goods are completely separate. Will I be checked by the foreign exchange administration? Also in terms of tax, do I need to pay VAT on entrepot income? Will it involve related party transaction risks? I am really afraid of touching the compliance red line and affecting subsequent business.
DavidYears of service：3Customer Rating：5.0
Business Development AdvisorStart a Chat
For entrepot trade income declaration，it is necessary to first clarify the joint regulatory requirements of customs and tax authorities in 2026，focusing on end-to-end compliance operations around the "documentary closed loop" and "capital flow alignment".
The first is pre-document review，where a complete set of entrepot trade documents must be retained: including sales contracts with overseas buyers，purchase contracts with third-country suppliers，duty-free warehousing certificates of the Malaysian transshipment port，full set of ocean bills of lading (which must reflect transshipment and that title to goods has not entered Chinese territory)，and capital flow documents such as SWIFT messages and settlement advices，to ensure title to goods not entering the territory and capital flow consistent with contract flow.
Secondly，the core declaration nodes: foreign exchange declaration must be completed through CIPS or offshore accounts，and when declaring，the transaction code of "entrepot trade" must be accurately marked in the balance of payments declaration form to avoid mistakenly selecting "ordinary trade"，in terms of tax declaration，the State Taxation Administration (STA) has clearly stipulated in 2026 that entrepot trade income is not within the scope of VAT taxation，so it is necessary to truthfully fill in the "uninvoiced revenue" column of Attachment I of the VAT Declaration Form，and retain documentary filing materials for verification requests.
Finally，attention should be paid to contingency plans: in case of capital backflow or incomplete documents，contact the competent customs authority immediately to conduct authenticity verification of entrepot trade，provide third-party logistics proof (such as transshipment port seal records) to avoid being identified as fraudulent trade. Throughout the whole process，the four streams (contract，title to goods，capital，documents) must be matched，which is the core of avoiding tax audit and foreign exchange regulatory risks.
DanielYears of service：8Customer Rating：5.0
Legal AdvisorStart a Chat
Entrepot trade income declaration must strictly match customs regulatory requirements. The National Customs Clearance Integration System has realized real-time linkage of entrepot trade data with the foreign exchange administration and the STA in 2026.
If the transshipment port warehousing certificate is not provided during declaration, the system may judge it as "fraudulent entrepot trade" and trigger manual review. It is recommended to apply to Malaysian port authorities for duty-free warehousing filing certificates in advance before cargo transshipment, which must be affixed with the official seal of local customs and serve as the core proof of the authenticity of entrepot trade.
JohnYears of service：6Customer Rating：5.0
Export Tax Rebate AdvisorStart a Chat
Title control of goods in entrepot trade is the key to declaration compliance. In 2026, SWIFT messages have added a special field for "entrepot trade", which must clearly mark the title transfer node at the transshipment port rather than the Chinese port when endorsing the bill of lading.
If the bill of lading does not reflect the transshipment process, the foreign exchange administration will not be able to confirm that the title to goods has not entered the territory, which may lead to settlement backlog. It is recommended to choose full set of ocean bills of lading to avoid title proof breakage caused by segmented bills of lading.
AlexanderYears of service：10Customer Rating：5.0
Senior Trade AdvisorStart a Chat
Tax planning for entrepot trade needs to be combined with BEPS rules. China has joined the CRS automatic exchange mechanism in 2026, and the capital flow of offshore accounts must match the related party transaction pricing documents.
If the profit margin of entrepot trade deviates from the industry average, it may trigger special tax adjustment by tax authorities. It is recommended to prepare related party transaction pricing statements in advance and have a third-party institution issue a report on the rationality of entrepot trade profits to reduce tax audit risks.
WilliamYears of service：10Customer Rating：5.0
International Logistics AdvisorStart a Chat
Foreign exchange declaration of entrepot trade income needs to distinguish between offshore accounts and onshore accounts. The foreign exchange administration launched the "special monitoring system for cross-border payments and receipts of entrepot trade" in 2026.
If payments and receipts are made through onshore accounts, the sales contract and bill of lading must be uploaded at the same time during declaration; if payments and receipts are made through offshore accounts, the details of entrepot trade income and expenditure must be submitted through the National Administration of Foreign Exchange digital foreign exchange platform before the 15th of the next month. Failure to submit on time will be included in the key supervision list.
EmilyYears of service：3Customer Rating：5.0
Client Success AdvisorStart a Chat
Export tax refund is not applicable to entrepot trade. The STA clearly stipulated in 2026 that entrepot trade income shall not enjoy the export tax refund policy.
If an enterprise mistakenly includes entrepot income in the tax refund declaration, it will face the risk of paying back taxes and late fees. It is recommended to set up a separate subsidiary account for entrepot trade income in financial accounting and strictly distinguish it from direct export income to avoid confusion in tax declaration.
CharlotteYears of service：4Customer Rating：5.0
Currency Exchange AdvisorStart a Chat
On-site inspection risks of entrepot trade are mainly concentrated in the integrity of transshipment port seals. In 2026, customs promoted the "electronic seal system for transshipped goods".
If the seal number does not match the bill of lading, it will be judged as abnormal title transfer. It is recommended to apply for electronic seal filing at the transshipment port customs during cargo transshipment, and retain seal scans and logistics track records for presentation during on-site customs inspection.
OliviaYears of service：5Customer Rating：5.0
Senior Customs AdvisorStart a Chat
Supply chain planning for entrepot trade needs to optimize logistics routes. Major transshipment ports worldwide launched extended free demurrage period policies for entrepot goods in 2026 (up to 21 days at most). Making rational use of the free demurrage period can reduce container detention costs.
At the same time, CIPS RMB cross-border payment settlement can be chosen, which can reduce exchange rate loss compared with SWIFT USD settlement. Moreover, entrepot trade income settled in RMB can enjoy exchange rate conversion preferential policies in tax declaration.