The Operational Risks of Buying Export Declarations in Steel Exports Are Surging. How to Avoid Compliance Traps?

In recent years, with the continuous increase in the export volume of Chinas steel industry, the method of buying export declarations has been widely adopted. However, with the strengthening of supervision, this mode of operation is facing more and more compliance risks. Tax replenishment, foreign exchange settlement problems and the uncertainty of the entire supply chain are bringing severe challenges to enterprises. Is your enterprise facing these troubles? This article will provide a detailed analysis of the current situation and coping strategies of buying export declarations, helping you remain invincible in the unpredictable international trade environment.

Buying export declarations refers to a way for enterprises or individuals without the right to export to conduct export business at a lower cost by using the name and customs declaration documents of a third - party company (usually a so - called shell company). In recent years, with the continuous development of international trade, buying export declarations has become a common means for some small and medium - sized enterprises and individuals to engage in international trade. However, the current policy and regulatory environment is strictly examining this method.import and exportCompliance Risks of Buying Export Declarations

In recent years, Chinas customs and tax departments have increased their supervision of the behavior of buying export declarations. Specific problems include:

1) Serious Phenomenon of Shell Companies:

A large number of buying - export - declaration transactions are completed through some shell companies with very low registered capital and no actual business operations. These companies usually exist only for the purpose of foreign exchange settlement, have no actual business operation capabilities, and do not pay the due taxes.2) Tax Replenishment and Fines:Export ClearanceandIn order to crack down on tax evasion, the customs and tax departments are now strictly examining the operation of buying export declarations. If the behavior of buying export declarations is discovered, the regulatory authorities will require tax replenishment (even a 2% tax rate may be a considerable amount). In addition, fines may also be imposed on the relevant responsible parties.3) Liability Risks of Freight Forwarders and Customs Brokers:
Since buying export declarations involves multiple third parties, freight forwarders and customs brokers often become the targets of investigation. The customs may require freight forwarders and customs brokers to provide the real cargo - owner information. If they cannot cooperate or provide the information, they will face penalties. This makes freight forwarders and customs brokers more cautious when facing buying - export - declaration business.Particularities of Steel Exports
Especially in the steel field, the risks and problems of buying export declarations are more prominent:1) Changes in Tax - Rebate Policy:

Since 2021, China has cancelled the tax - rebate policy for some steel products, which directly affects the profit margin of steel trade. To avoid high - value - added tax, many steel exporters have turned to buying export declarations, trying to reduce costs by concealing the true identity of the cargo owner and evading the obligation to pay value - added tax.

2) Impact on the Market and Industry:

The prevalence of buying export declarations has directly led to price distortion and market - order chaos in the steel industry, affecting the supply - demand relationship of steel and international market prices. This has put pressure on the international businesses of some large steel enterprises (such as Minmetals, Baosteel, etc.) and is not conducive to the brand and image building of Chinese steel.Tax Compliance IssuesExport DrawbackBuying export declarations is essentially a false export carried out through a third - party company, and its main problem lies in evading tax liability. In terms of tax compliance, the customs and tax departments have strengthened their monitoring and crackdown on this behavior. Enterprises or individuals that fail to issue value - added tax invoices and pay relevant taxes as required may face huge fines and other legal responsibilities.
Foreign Exchange Settlement RisksIn the process of buying export declarations, there are also many problems in foreign exchange settlement. Since buying export declarations do not involve real trade activities, the foreign - exchange capital flows involved often have irregular and opaque situations, which may lead to foreign - exchange control problems. The State Administration of Foreign Exchange may investigate these capital flows, further increasing the compliance risks of enterprises.

Chain Reactions in the Supply Chain

Buying export declarations not only affects the export enterprises themselves, but also has a negative impact on the entire supply chain. For example:

1) Upstream Steel - Producing Enterprises:

If the products of buying export declarations are steel, these upstream suppliers may face situations where they cannot issue invoices normally and their sales are unclear.

2) Downstream Buyers and Partners:

Companies that buy export declarations are often included in the high - risk enterprise list, which may cause their international customers to lose trust and even terminate cooperation.

Risk transfer: Exchange rate fluctuations and trade disputes are borne by the agent.Professional support: Enjoy tariff preferences under free trade agreements such as RCEP.
: It is required to provide a G - mark test report and factory audit records.Product compliance certification

1、Establish a compliant export process

For enterprises engaged in international trade for a long time, they should try to avoid the high - risk operation mode of buying export declarations. It is recommended that enterprises establish a formal export process, obtain legal import and export qualifications, and conduct compliant customs declaration and settlement.

2、Understand tax and foreign exchange policies

Enterprises should pay close attention to the changes in national tax and foreign exchange policies. Especially in the export business of sensitive commodities such as steel, they need to operate cautiously to avoid unnecessary losses caused by policy changes.

3、Leverage professionalforeign tradeservice platforms

Enterprises can choose to cooperate with professional foreign trade service companies or platforms. These companies usually have compliant qualifications and mature export processes, which can help enterprises complete export business legally and compliantly and reduce risks.

In general, under the current environment, the risks of buying export declarations are getting higher and higher, especially in sensitive fields such as the steel industry. Relevant enterprises need to carefully choose the export method and establish a compliant operation process to avoid potential risks brought about by policy changes and strengthened supervision. Although buying export declarations can bring short - term convenience, long - term compliance risks cannot be ignored. If you want to know more professional suggestions on legal and compliant exports, or hope to operate legally with the help of a mature foreign trade service platform, you are welcome to contact us at any time.ZhongShen International TradeWe will help you resolve risks, enhance competitiveness, and ensure the safe and stable progress of your international trade business.