Notice!NO.17 Announcement May Affect Your Foreign Trade Company!

The State Taxation Administration announced on July 7, 2025 (Announcement No. 17) the revision of the Corporate Income Tax Prepayment Declaration Forms. Article 7 introduces key adjustments for export businesses, signifying the upcoming termination of the "falsified export" practice.

Effective October 1, 2025, enterprises acting as export agents (including those engaged in Market Procurement Trade, Integrated Foreign Trade Service, etc.) must simultaneously submit basic information of the actual consignors and export amounts when filing prepayment declarations. Failure to accurately report such information will result in the exports being deemed as self-operated exports, making the declaring enterprise liable for corporate income tax obligations on the corresponding export proceeds. Here, "actual consignors" explicitly refer to the genuine production and sales entities of the goods. This measure aims to curb illicit "falsified export" operations by clarifying liability attribution.

"Falsified export" refers to an illegal practice where enterprises or individuals without import-export operation rights engage third-party customs brokers to purchase export documentation from qualified entities, thereby conducting customs declarations under others’ names. 

Documentation typically includes:

Packing lists

Commercial invoices

Export sales contracts

Customs declaration powers of attorney

Customs declaration forms

Inspection authorization letters

and other clearance documents.

While this practice ostensibly streamlines procedures and reduces costs,the reality exposes enterprises to substantial legal liabilities.

Operational Nature:

Enterprises purchase third-party import-export rights for customs clearance, frequently observed in low tax-refund-rate commodity exports (e.g., small goods) to forgo compliance costs.

Dual Hazards:

Tax Revenue Erosion:

Fabricated documentation conceals income, leading to leakage of VAT, Corporate Income Tax (CIT), and other tax revenues. Severe cases may constitute the crime of tax evasion under China's Criminal Law.

Market Disruption:

When involving bulk commodities (e.g., steel products), falsified exports distort pricing mechanisms and supply-demand equilibrium, undermining legitimate foreign trade governance.

Perfect Corporate Qualifications

Proactively obtain import-export operation rights, establish corporate settlement accounts, and ensure the legitimacy and standardizationof export operations.

Enhance Internal Compliance Controls

Establish robust financial management systems, enabling accurate recording of every sales transactionin corporate ledgers to prevent income concealment. Implement end-to-end monitoringfor potential falsified export activities.

Conduct Risk Assessment & Solutions

Maintain comprehensive financial controls to guarantee transparent revenue reportingand eliminate concealment risks through automated auditing protocols.

Monitor Regulatory Updates

Closely track cross-border e-commerce policy adjustments at national and local levels, adapting operational strategies promptly to ensure continuous compliance alignment.