Can't get tax refunds under EXW terms? The Misconception of 90% of Foreign Trade Practitioners

Mr. Zhang recently encountered a vexing matter: The company exported a batch of goods under EXW terms, but the financial staff told him that it was impossible to apply for tax refunds. This left him very confused - Is it really true that EXW terms have no connection with export tax refunds? Today, let's uncover this common misconception among foreign trade practitioners.

According to the Incoterms, EXW (Ex Works) means that the seller only needs to complete the delivery at the factory or warehouse, and the buyer shall bear all subsequent transportation, customs declaration and other costs and risks. This seemingly simple term actually hides three key conditions for tax refund applications:

• The goods actually leave the country and obtain customs export data.
• The seller needs to be a general taxpayer of value-added tax.
• The amount of foreign exchange received shall match the amount on the customs declaration form.

The case of Ms. Li is quite representative: After her factory exported goods under EXW terms, because the freight forwarder designated by the buyer did not timely feedback the waybill information, resulting in the lack of key vouchers such as ocean bills of lading, and finally the tax refund failed. This exposes two common risks under the EXW mode:

• The loss of logistics control leads to the breakage of the document chain.
• The degree of cooperation of the buyer directly affects the success rate of tax refunds.

The foreign trade experts of Zhongshitong suggest taking the following measures:

• Clearly stipulate in the contract that the buyer shall provide copies of the full set of transportation documents.
• Track the departure status of the goods through the third-party logistics monitoring system.
• Adopt the dual-track management of "formal customs declaration" and "actual customs declaration".

It is worth noting that the "advance declaration" reform implemented by the General Administration of Customs in 2023 has won more ample document preparation time for EXW sellers.

When encountering special scenarios such as sample exports and cross-border e-commerce, the tax refund processing under EXW terms is more complicated:

• For samples worth less than 5,000 yuan, the buyer's payment voucher shall be provided.
• For cross-border e-commerce, additional platform transaction data shall be prepared.
• For entrepot trade, special attention shall be paid to the connection of documents of intermediate merchants.

Instead of getting tangled up in the terms themselves, it is better to re-examine the design of the whole trade process. It is recommended that foreign trade enterprises establish a special inspection checklist for EXW business, covering 12 key nodes from contract signing to document archiving. After all, in the matter of export tax refunds, details often determine success or failure.

What thorny problems have you encountered during the EXW tax refund process? Welcome to share your practical experience in the comment area. We will randomly select three readers to provide free foreign trade compliance diagnosis services.