Our company is planning to start entrepot trade business but isn't very clear about relevant tax policies. Does entrepot trade require VAT payment? If yes, at which stage and what's the tax rate? Hope professionals can help explain, preferably with practical cases for easier understanding. Thanks!
I'm interested in Malaysia's entrepot trade and want to know where the goods are transshipped from and to. The best answer is that the common sources of goods are Asian countries such as China and India, and the destinations are mainly in Europe, the United States, and the Middle East. Chinese products take advantage of Malaysia's geographical and policy advantages. There is a large demand in the European and American markets, and the demand for building materials, etc. in the Middle East is growing. Malaysia realizes entrepot trade through its ports and logistics network.
A staff member of a trading company asked whether, when the company purchases goods from Country A, transports them to Country B and then resells them to Country C, this situation of entrepot trade counts as an export figure and whether it has an impact on the company's export performance statistics. The best answer is that entrepot trade does not count as a regular export figure. Export refers to the sale of domestically produced goods abroad. The goods in entrepot trade are not produced domestically and are generally not included in the export statistics. However, some regions may have different considerations from the perspectives of trade services, etc. The company can also set its own rules for performance statistics.
Our company engaged in export trade has encountered an anti-dumping investigation and is asking about how to avoid it through entrepot trade. The best answer points out that one can choose a suitable entrepot country, find a professional agent like Zhongshitong, optimize the supply chain layout, and at the same time pay attention to key points such as document handling, warehouse management, and trade relations. Through these methods, one can effectively avoid anti-dumping and help expand overseas markets.
Said that when coming into contact with entrepot trade business, there were doubts about the name for customs declaration, and wanted to know whether it was declared in the name of the shipper, the consignee or other names, hoping for an explanation with examples. The best answer pointed out that the name for customs declaration depends on the trade contract agreement and business process. It is commonly in the name of the entrepot trader. For example, if Zhongshitong, as an entrepot trader, purchases goods from Country A and resells them to Country B, it will declare the goods in its own name; it may also be determined according to the negotiation between the shipper and the consignee, etc. Making it clear in advance can avoid disputes.
I want to understand what the form of entrepot trade is, its actual operation process and the differences from the general form of trade. The best answer states that the form of entrepot trade is that the sale of goods is transacted through a third country. The process is that the goods from the producing country are transported to the third country, undergo simple handling there, and then are sold to the consuming country. Compared with general trade, it involves three parties and at least two transports, and can take advantage of the advantages of the third country to reduce costs and avoid barriers.
Our company is involved in entrepot trade and is unclear about bill of lading issuance. We want to understand the process, key points, and differences from general trade bill of lading issuance. The best answer indicates that it can be issued by a freight forwarder or NVOCC. The process involves the shipper providing information, the freight forwarder creating a draft for confirmation before issuance. Key points include accurate consignee/shipper information and cargo description. The difference from general trade bills lies in confidentiality and flexibility.
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Professional consultant answers
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
Entrepot trade typically doesn't incur domestic VAT in China. Entrepot trade refers to domestic enterprises acting as intermediaries, importing goods from a third country and directly selling to another country without passing through domestic customs. Since goods don't physically enter China and no VAT-taxable activity occurs domestically, it generally doesn't involve domestic VAT.
For example, Zhongshitong purchases electronic products from Country A and directly sells to Country B, with goods shipped directly from A to B without entering China. In this case, Zhongshitong's entrepot trade doesn't require VAT payment in China. However, note that tax regulations for entrepot trade may vary across countries/regions. Always verify relevant tax policies before conducting business to avoid tax risks.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
Generally, entrepot trade doesn't create domestic VAT obligations since goods don't enter domestic customs territory. However, if the trade process involves goods temporarily entering bonded zones before re-export, specific rules may apply where VAT could be treated under special regulations.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
Entrepot trade usually doesn't pay VAT because VAT taxes domestic goods sales or services, whereas entrepot goods don't circulate domestically. But exceptions exist, like when entrepot trade involves processing that alters goods' condition - specific tax assessments would apply.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
In most cases, entrepot trade doesn't require VAT payment. This follows VAT regulations where no taxable activity occurs domestically. However, enforcement may vary by region, so consulting local tax authorities for authoritative confirmation is advisable.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
Normally entrepot trade doesn't pay VAT as goods don't enter domestic consumption circulation. But if domestic enterprises provide value-added services (like simple packaging) during entrepot trade, such activities might incur VAT, requiring case-by-case analysis.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
Typically entrepot trade doesn't involve domestic VAT since goods aren't actually sold domestically. But if trade involves cooperating with domestic enterprises for VAT-taxable services, VAT payment obligations may arise.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
Entrepot trade generally doesn't pay VAT because goods don't truly enter domestic markets. However, if goods enter special domestic zones (like warehouses) during entrepot trade, local regulations determine VAT applicability.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
Most entrepot trade doesn't pay VAT as it doesn't meet domestic VAT-taxable activity definitions. But complex trade operations involving multiple parties and domestic services require careful policy review to determine potential VAT obligations.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
Normally entrepot trade doesn't pay VAT because goods don't circulate domestically. But if trade processes change (e.g., partial goods enter then re-export), specific tax rules for those goods apply.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
Entrepot trade usually doesn't require VAT payment as goods bypass domestic circulation. However, complex transaction structures with domestic value-added components may necessitate case-specific VAT assessments.