Cross-border e-commerce business is developing rapidly, and many sellers ignore the importance of fiscal and tax compliance in the rapid expansion, resulting in the accumulation of subsequent risks. Today we will sort out the seven key points of cross-border e-commerce fiscal and tax compliance to help you operate in both a robust and compliant manner.

I. Compliance architecture design

Compliant structural design is the foundation of corporate finance and tax compliance. Many cross-border e-commerce sellers have multiple stores, multiple companies, and even Hong Kong or offshore companies, and it is crucial to rationalize the relationship between them.

A good structure not only solves the problems of capital return and accounts, but also realizes the consolidation of financial statements by setting up the main company and associating it with other companies by agreement, which helps the business owner to have a clear grasp of the operation status. In addition, a compliant structure can also meet the needs of export tax rebates and tax planning, minimizing financial and tax costs and risks.

II. Export customs clearance

Export customs declaration is the starting point of cross-border e-commerce tax compliance. Many small and medium-sized sellers are accustomed to using the “double clearing package tax” mode, but if exported in the name of the logistics company, the enterprise has no record in the customs, so it can not be compliant with the money back to the company's account.

Without export records, corporate income tax issues will ensue, and many sellers have to collect payments through personal accounts, further triggering fiscal risks. Therefore, it is crucial to choose the customs declaration mode that suits your situation. Different modes have different operational requirements, and it is recommended to customize the program according to the actual enterprise.

III. Funds return compliance

The core of funds return compliance is to address the issue of “personal account receipts”. There are two main approaches:

Collections using company accounts: The prerequisite is that the enterprise must make its own customs declaration, have an export record at customs, and have the foreign exchange return to the public account and on file in order to be considered as compliant income.

Payback to individual accounts through the 1039 model: This is the state's way of encouraging the procurement of non-invoiced small and medium-sized sellers to export, through the operation of individual businessmen in designated areas, which still need to complete the customs declaration process to ensure that exports correspond logically to tax.

IV. Accounts compliance processing

Accounts compliance is one of the most challenging aspects of the tax system. Accounts are not only the basis for taxation, but also the “barometer” of business operation. However, many cross-border e-commerce sellers neglect their accounts, and even appear to have multiple sets of accounts and confuse public and private accounts, which brings huge risks to enterprises.

Compliance with the accounts can not only avoid the risk of tax audit, but also make the business situation at a glance, help enterprises scientific decision-making and management.

V. Tax compliance

Tax compliance is the “safety lock” of business operation. Behaviors such as long-term zero declaration and large amount of water in personal accounts are very likely to attract the attention of tax authorities, and once investigated, the consequences will be serious.

Common tax violations of cross-border e-commerce mainly focus on tax evasion and tax fraud. Enterprises should carry out tax registration, tax declaration and tax payment in accordance with the law, put an end to fluke mentality and establish a healthy tax management system.

VI. Export tax rebates/exemptions

Export tax rebate/exemption is a tax incentive provided by the state for foreign trade enterprises, which can effectively reduce the cost of enterprises. Many sellers ignore this policy.

If there is a special invoice for the purchase, the enterprise can enjoy a tax rebate of 13%; even if there is no invoice, compliance can be achieved through export tax exemption. Good tax rebate management not only boosts profits, but also enhances business compliance.

VII. Tax planning

Tax planning is not financial counterfeiting, but a legitimate way to reduce tax burden and improve management efficiency. Cross-border e-commerce involves multiple subjects and geographic regions, and tax planning needs to be based on a clear structure and standardized accounts.

A good tax planning not only saves tax in a reasonable way, but also helps companies to identify management loopholes and create new growth points. It is recommended to be implemented with the assistance of tax professionals or organizations.

summarize

Cross-border e-commerce tax compliance is a systematic project involving seven major links: architecture, customs clearance, capital, accounts, taxation, tax rebates and planning. Each link should not be ignored, early standardization, long-term persistence, in order to make enterprises in the international market in a stable and far-reaching.

If you have questions about a particular segment or need a customized compliance solution, feel free to contact us!