The Chinese Customs is serious on goods Export to avoid tax evasion and evasion behavior

Low price exports have given rise to tax evasion and evasion behavior

Paid export refers to a method of export in which some enterprises or individuals without export rights purchase a set of legal export declaration documents from other import and export companies with operating rights, in order to export goods and declare them to customs.

Purchase order export applies to: 1. Exporters do not have export rights; 2. Small quantity or value of goods; 3. The product tax rate is not high and there is no demand for tax refund; 4. Low or zero tax refund rate, high invoicing costs; 5. The factory is unable to issue value-added tax invoices, and is unable to declare and refund taxes normally.

In general, paying for exports belongs to the gray industry and is a business model that is tacitly approved by the government under the premise of encouraging exports. But this has also led to different payment models, such as those that do not involve tax refunds and those that fraudulently issue invoices to obtain national tax refunds. So there was a strange phenomenon, where the paying company could export and even refund the money.

Since 2021, after the country abolished most steel tax refunds, the entire steel market has turned from prosperity to decline, and global procurement has shifted from being concentrated in China to partially shifting to countries such as India and Southeast Asia. The export of steel is becoming increasingly difficult. At this time, some people take risks and use the model of paying for exports, using 13% of the country's tax losses as subsidies, to illegally and improperly obtain overseas orders.

For many years, paying for exports has been a common occurrence in China, but this situation has become very serious since the end of 2022. The quantity of goods exported overseas is constantly increasing, but they cannot flow into mainstream formal factories. Paying the bill for exports is stifling legitimate business, and no enterprise can be compared to those sellers who evade taxes.

After the complete cancellation of export tax rebates for all types of steel by the country in 2021, exporters no longer need to apply for export tax rebates from upstream invoices and export documents to the tax department. Foreign receiving merchants never need domestic exporters to issue invoices, so domestic exporters have "goods that do not require invoicing" on hand. This part of "invoices that do not need to be issued" can be issued to downstream users who only need input invoices and do not need goods.

Downstream users can use low prices to purchase value-added tax invoices for input tax deduction, without actually purchasing steel. So, everyone in the entire industry chain was very happy, and each character made some money - exporters earned a few points by selling tax invoices, downstream users who bought tickets but didn't buy goods earned a few input tax deduction points, and foreign receiving merchants bought goods at a low price. But only our country suffered losses in taxation.

So, exporting at low prices is not scary. What's scary is that the tax evasion and evasion behaviors that arise from exporting at low prices are very bad and must be strictly investigated.