Entrepot Trade Q&A

Is 25% Tariff Applicable to Transshipment Trade?

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I engage in transshipment trade in Southeast Asia. Recently, a batch of electronics made in Vietnam was transshipped to the EU via Hong Kong. We had been enjoying duty exemption policy all along, but this time we were suddenly notified to pay a 25% tariff.

Our finance team said the "Applicable Tax Rate" column on the customs declaration form was filled incorrectly, resulting in the goods being detained at Yantian Port for nearly two weeks, and the late fee is increasing daily, which is distressing. We used to get direct clearance with the "Hong Kong Re-export" documents before; why is there a sudden hold-up this time?

Has the function of Hong Kong as a transshipment port changed? How can we remedy the situation now? Can we reduce costs by adjusting the transshipment structure or applying for a special supervision zone?

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Expert Answer

Charlotte
CharlotteYears of service：4Customer Rating：5.0

Currency Exchange AdvisorStart a Chat

Many clients mistakenly equate transshipment trade with "duty-free trade"，especially when transshipping via free ports like Hong Kong，ignoring whether the goods undergo "substantial stay and processing" at the transshipment port or the "determination of cargo ownership location". Common Misconception: Defaulting that "Hong Kong re-export" equals "zero tariff". In fact，Hong Kong only grants duty exemption for "offshore transactions" (where goods do not enter Hong Kong territory). If goods are unpacked，labeled，or stored in Hong Kong for more than 90 days，customs will classify them as "domestic sales" and impose tariffs accordingly.

If declaration errors occur due to misjudgment of tax rates，customs may conduct "inspection and valuation" on the goods. Not only will the port detention fee increase by 0.5% of the cargo value per day，but the entity may also be included in the customs blacklist due to "classification errors"，affecting export tax refunds for the subsequent 12 months. Chain Negative Reactions: Detained goods may deteriorate due to temperature anomalies (such as electronics)，and after being detained，storage insurance fees must be paid. The total cost may exceed 30% of the cargo value.

Physical risk isolation measures should start from two aspects: First，lock in cargo ownership，and compress the storage time in Hong Kong to within 72 hours through the three-stage transshipment of "Vietnam-Hong Kong-EU" to avoid triggering the "substantial processing" determination，Second，adopt the "transit goods" declaration mode and submit the "original storage certificate" from the Hong Kong warehouse (which must include clauses prohibiting unpacking/processing).

Exclusive Loss Mitigation Tips: If the goods have completed customs clearance in Hong Kong，you can apply for VAT deferment within the EU through the "export tax refund" policy，converting the 25% tariff into "deferred payment". At the same time，supplement the proof that "the final destination is the EU" on the customs declaration form to reduce inspection risks. It is recommended to verify the HS code classification simultaneously. In the "Cross-border Transshipment Commodity Classification Guidelines" to be newly implemented in 2026，the tax rate for some electronics has been reduced to 15%，which needs to be carefully checked.

Robert
RobertYears of service：6Customer Rating：5.0

Warehouse Management AdvisorStart a Chat

Chief Customs Declaration Expert: The core of whether transshipment trade is taxed lies in "whether it constitutes 'domestic sales'". When transshipping via Hong Kong, if goods are not unpacked/processed in Hong Kong, customs may grant duty exemption as "transit goods"; if they have been unpacked/labeled, they may be regarded as "domestic sales" and require supplementary tax payment.

It is recommended to supplement the "unpacked" statement, attach the "original storage certificate" from the Hong Kong warehouse, and apply for "pre-classification ruling" to clarify the tax rate corresponding to the HS code.。

David
DavidYears of service：3Customer Rating：5.0

Business Development AdvisorStart a Chat

Senior Logistics Expert: It is recommended to change the Vietnam-Hong Kong segment to Vietnam-Yantian Port (Bonded Zone), Shenzhen-EU, and utilize the "domestic territory outside customs" policy of the bonded zone.

Goods are exempt from tariffs when entering the bonded zone and can be directly exported when transshipped. It is necessary to apply for "one-day tour in bonded zone" in advance, and shorten transshipment time and reduce port detention fees through the "exit-entry" mode.。

William
WilliamYears of service：10Customer Rating：5.0

International Logistics AdvisorStart a Chat

Senior Tax Consultant: For transshipment within the EU, you can apply for "VAT deferment", which means that when goods clear customs at EU ports, import VAT is temporarily not paid and will be paid after the goods are sold.

It is necessary to ensure that the EU client is a genuine end buyer and provide the "final sales confirmation". If the Hong Kong segment is applicable to "offshore transactions", duty exemption can be applied for to reduce the overall tax burden.。

Sophia
SophiaYears of service：7Customer Rating：5.0

Senior Customs AdvisorStart a Chat

Trade Compliance Expert: Transshipment trade requires attention to "four streams alignment": logistics (bill of lading), capital flow (foreign exchange), cargo ownership flow (warehouse receipt), and document flow (customs declaration form).

If the 25% tax rate is involved, it is necessary to verify whether foreign exchange is remitted through channels with "no real trade background" to avoid being suspected of money laundering. It is recommended to use the CIPS system for settlement to ensure that the capital flow is consistent with the declaration.。

Olivia
OliviaYears of service：5Customer Rating：5.0

Senior Customs AdvisorStart a Chat

Foreign Trade Legal Expert: Transfer of cargo ownership in transshipment trade must be realized through "bill of lading endorsement". It is necessary to ensure that the Vietnamese exporter, Hong Kong transshipper, and EU importer sign a "cargo ownership transfer agreement" to clarify the "transfer node of cargo control right".

If the original agreement does not specify this, it must be supplemented immediately to avoid customs detention due to "unclear cargo ownership".。

Alexander
AlexanderYears of service：10Customer Rating：5.0

Senior Trade AdvisorStart a Chat

On-site Inspection Expert: When goods are inspected at Yantian Port, the key verification point is "whether the transshipment port is the final destination". If Hong Kong is the final destination, the "Hong Kong re-export" certificate must be provided; if it is in transit, the "transit goods customs declaration form" must be provided.

It is recommended to communicate with the customs inspection department in advance and submit the "unprocessed goods certificate" (such as intact packaging, no unpacking) to shorten the inspection time.。

Note: We respect all users' opinions and contributions. However, comments and answers reflect the views of their respective authors only.
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