What taxes are involved in foreign trade transit trade? Let's find out!
Solved#Entrepot trade#
Our company plans to start foreign trade transit trade but has no prior experience. We are unsure about the taxes involved in this process. We’ve heard the tax types can be quite complex and would like to ask: What taxes are generally applicable in foreign trade transit trade? What are the approximate tax rates for each type? We hope experienced colleagues can provide detailed explanations to help us prepare in advance.
Professional consultant answers
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
Foreign trade transit trade typically involves taxes such as VAT and customs duties.
For VAT, if transit trade goods are not processed domestically and only circulated, there is usually no VAT obligation. However, if goods undergo simple domestic processing before re-export, VAT may apply. The general VAT rate is commonly 13% or 9%, depending on the goods type, while small-scale taxpayers have a 3% rate (currently with preferential policies).
For customs duties, transit trade goods are normally exempt if not consumed domestically. However, if goods enter bonded zones or special regulatory areas before re-export, certain customs policies may apply, depending on the goods and regional policies. Additionally, stamp duty may apply at 0.03% of the sales contract amount.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
In transit trade, some regions may also impose local surcharges, such as urban maintenance and construction tax, and education surcharges. Urban maintenance and construction tax is calculated based on VAT and consumption tax, with rates of 7% in urban areas, 5% in counties/towns, and 1% elsewhere. Education surcharge is typically 3%, and local education surcharge is usually 2%.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
If transit trade involves financial services like international settlements, financial service-related taxes may apply. However, such cases are relatively rare and depend on the specific financial services involved and relevant tax regulations.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
If warehousing services are involved in transit trade, stamp duty may apply to warehousing contracts at 0.1% of the storage fees. It’s important to clarify whether warehousing is part of the transit trade process.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
If intellectual property transfers or licensing (e.g., trademarks, patents) are involved in transit trade, stamp duty may apply at 0.03% or 0.05% of the stated amount.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
Additionally, if the transit trade generates profits, corporate income tax applies. The standard rate is 25%, with preferential rates for eligible small and low-profit enterprises.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
In some cases, transit trade goods may be subject to temporary taxes due to special regulatory requirements or policies. Stay updated on local policy changes.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
If transportation contracts are signed for transit trade, stamp duty applies at 0.05% of the transportation fees.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
If transit trade goods fall under consumption tax categories, import consumption tax may apply even if not sold domestically, depending on the goods type and policies.