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How to determine the party responsible for the tax refund of an export agent?
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Our company just started doing export agency business. The contract we signed with the agency company only specified the agency fee, without explicitly stating who would receive the tax rebate. Now that the first tax rebate has arrived, the agency company claims it should belong to them, but we believe it should be ours. How can we determine who the tax rebate belongs to? Are there any clear regulations on this matter?
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The core principle of tax refund attribution is "who exports，who receives foreign exchange，and who receives tax refunds." First，you need to check the "Domestic Shipper" column on the customs declaration form. If it lists the name of the agency company，then legally，the exporter is the agency company，and the tax refunds theoretically belong to them. Conversely，if it lists your company's name (i.e。the agency company is merely acting as a customs declaration agent)，the tax refunds will belong to your company. Second，check the VAT invoice: Who issued the VAT special invoice as the seller? The invoice issuer must be the tax refund declaration subject. Most importantly，refer to the contract terms. According to the State Taxation Administration's Announcement No. 24 of 2012，the client and the agent must explicitly stipulate the ownership of the tax refunds in the contract. Otherwise，the tax authorities have the right to refuse processing. You should immediately verify whether the headings of the declaration form，VAT invoice，and foreign exchange water bill are consistent，and check whether the contract includes clauses related to "agency export certificates." If the contract is unclear，the tax refunds will be held up by the tax authorities，and both parties will need to sign a supplementary agreement to clarify ownership. Otherwise，you will face risks such as unavailable tax refunds or subsequent audits.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
From the operational process perspective, the flow path of the tax refund directly determines its ownership. You need to clarify two key points: First, the transfer direction of the VAT invoice. If you issue it to the agency company, and the agency handles the tax refund, the money should be transferred to your account after it arrives at their account; if the agency issues it to the foreign investor, then the tax refund will be their income. Second, who is the subject of foreign exchange settlement. The name of the payee on the bank water bill must be consistent with the subject of tax refund declaration. In practice, many export agencies adopt the "no-face-to-face" model: you issue the VAT invoice to the agency, and they handle customs declaration, receipt of foreign exchange, and tax refund. After deducting the agency fee, they will transfer the remaining balance to you. In this case, it is necessary to sign the "Agency Export Agreement" before the shipment, clearly stipulating that "the tax refund shall belong to the client after deducting the relevant fees", and specifying the time of receipt and the liability for breach of contract. It is recommended that you immediately suspend the shipment of the second batch of goods, first sign the tax refund allocation agreement for the first batch of goods clearly, and require the agency to provide the "Certificate of Agency Export Goods" issued by the tax bureau, which is the legal document for subsequent tax refunds.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
This is essentially a business negotiation issue, not a simple regulatory matter. You’re currently stuck in a situation where the money has arrived but the terms haven’t been clarified—this is when communication skills are put to the test. Never directly say "The tax refund belongs to me," as this will escalate the conflict. Instead, suggest: "Mr. Wang, the first batch of tax refunds has arrived. Let’s finalize our future cooperation model now. Would you prefer a package fee (with the refund going to you) or pure agency services (with the refund going to us)? Both options are acceptable, but it ultimately depends on which is more beneficial for our long-term partnership." This approach preserves the other party’s face while shifting the responsibility back to them.
Strategically, if the tax refund amount is not significant, I’d recommend treating it as a "learning fee" for the agency, but clarify in the email: "This tax refund is a special arrangement for our initial cooperation. Future batches will follow the terms of the supplemental agreement." Use concessions to secure favorable long-term terms from the agency. Contract clauses should read: "The agent shall transfer X% of the tax refund to the client’s designated account within 5 working days of receipt, and pay a 5‰ daily penalty for late payments," rather than simply stating "the tax refund belongs to whom." Remember: In foreign trade cooperation, you can temporarily compromise on money, but rules must be set from the start.