Our company plans to use an agency to import a batch of goods, but we are confused about the payment process. We have disagreements with the agency regarding who should handle the payment. I’d like to know how payment responsibility is generally defined in agency import business. Should it be the client or the agency? Is there any legal basis? We hope to receive a professional answer. Thank you.
It is said that someone has just started the entrepot trade business and doesn't know how to receive payments in China, worrying about affecting the capital flow and trade process. The best answer points out that common payment methods include opening a foreign currency account through a domestic bank, which is simple and safe to operate, but the review standards of each bank are different; an offshore account can also be used, which has strong flexibility, but attention should be paid to its maintenance; third - party payment platforms can also be used, but the handling fees may be high, and compliance should be noted in all cases, and trade documents should be retained.
Want to know about tax payment matters for entrepot trade agency, inquiring about involved tax types, tax calculation basis, payment procedures, and preferential policies. The best answer indicates it mainly involves VAT and corporate income tax. General VAT taxpayers have a 6% rate, small-scale taxpayers 3%. Corporate income tax is typically 25%. Taxes should be declared and paid according to regulations, with eligible cases qualifying for additional deductions and other benefits. Specifics depend on actual business and local policies.
The company plans to engage in export agency business but is unclear about income recognition and calculation methods. It asks whether financial treatment should be based on receiving payments from clients or the customs declaration time of exported goods, and whether income calculation should be a percentage of export value or other methods. The best answer states that export agency income recognition follows the accrual basis, can be confirmed upon customs declaration completion, typically treats agency fees as income (calculated as a percentage of export value), and requires proper financial record-keeping.
The company has engaged an import agent for import business but is unsure how to pay the agent, inquiring about payment methods, their pros and cons, and the timing of payments. The best answer suggests that payment methods include wire transfer (T/T), letter of credit (L/C), and collection, with T/T being fast but requiring accurate information, L/C being secure but involving cumbersome procedures, and collection being high-risk due to reliance on commercial credit. For payment timing, a 30% - 50% deposit can be paid in advance, with the balance paid after the goods arrive and pass inspection.
I plan to engage in export agency business and have doubts about payment - related operations, such as the payment method of customers, the process and procedures for transferring to the principal, and precautions. The best answer points out that it is common for foreign customers to transfer money to the agency company's account, and after deducting the fees, transfer it to the principal. It is necessary to sign a good agreement, handle foreign exchange entry, settlement of exchange, etc., to ensure compliant operations and clear accounts.
Our company intends to engage an agency company to handle export business. We are not clear about how to pay taxes for export agency and would like to know the precautions for tax payment, specific tax types and tax calculation bases. The best answer states that if the entrusting party is a manufacturing enterprise, the "exemption, credit, and refund" tax method is generally implemented; for foreign trade enterprises, it is usually tax exemption and refund. The agency party is mainly involved in the value-added tax on agency service income, which is paid at a 6% tax rate for modern service industries, and the tax calculation basis is the total price and out-of-price expenses.
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Professional consultant answers
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
In agency import business, the payment party is usually determined by the terms of the agency import agreement. Generally, there are two common scenarios. If the agreement explicitly states that the client will handle the payment directly, then the client is responsible for the payment. This applies when the client has strong control over funds and is familiar with the payment process.
Alternatively, if the agreement specifies that the agency will handle the payment, then the agency is responsible. For example, the agency may have more resources and experience in international trade, making it more convenient for them to manage the payment.
From a regulatory perspective, relevant rules such as the Implementation Rules for Foreign Exchange Management in Goods Trade emphasize that payment responsibilities should be fulfilled according to the contract. In practice, both parties should negotiate and determine the payment party based on their circumstances, trade practices, and other factors, and clearly specify it in the agreement to avoid future disputes.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
It usually depends on mutual negotiation. If the client has a foreign exchange account and is proficient in operations, they can handle the payment themselves to better control the funds.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
Generally, the agency handles the payment more often because they are more professional in managing import processes, making the payment step smoother for them.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
If the client has strict fund management requirements and wants to control the payment directly, then the client should handle it, but they must ensure compliance with foreign exchange regulations.
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
In some cases, the agency handles the payment first, and then the client reimburses the agency, which facilitates the agency’s arrangement of import matters.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
The key is to determine who is more convenient and capable of completing the payment. For example, if the agency has good credibility and strong bank relationships, the payment process may be more efficient.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
If the client has special payment requirements, such as specific settlement methods, they may need to handle the payment themselves to meet those needs.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
From an operational simplicity perspective, if the agency handles the entire import process, it’s more coherent for them to manage the payment as well.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
Both parties should also consider the impact of foreign exchange policy changes and choose the party better equipped to handle such changes for payment.