On October 1, 2025, the "Announcement on Optimizing Matters Related to Corporate Income Tax Pre-payment Declarations" (State Taxation Administration Announcement No. 17 of 2025, hereafter "Announcement 17") will take effect. This new regulation not only streamlines the pre-payment process but also strictly standardizes export practices, particularly the long-standing grey area of "Purchase for Export Declaration," from the perspective of corporate income tax declaration. It signals the end of the unregulated "purchase" era and the beginning of a new epoch for export compliance.
I. Core Points of Announcement 17: Focusing on Export Business Declaration
The core of Announcement 17 is to strengthen the collection and management of corporate income tax, ensure the accurate declaration of export income, and clarify tax responsibilities under various export models. Its requirements for export businesses can be summarized as follows:
Who Exports, Who Declares Income Tax: It clarifies that production and sales enterprises should calculate and declare corporate income tax according to the law on income obtained from exporting goods.
Self-operated Export: Must declare income corresponding to goods they produce and sell themselves.
Consignment Export: Must declare income corresponding to goods they entrust to others for export.
Transparency in Agency Export Information: Enterprises engaged in export agency businesses (including through market procurement trade, comprehensive foreign trade services, etc.) must simultaneously submit the "Summary Table of Entrusted Export Situations for Export Agency Enterprises" during pre-payment declarations, providing basic information and export amounts of the **actual entrusting exporter (i.e., the actual production and sales unit of the exported goods).
Stringent Non-Compliance Consequences: If an export agency enterprise fails to accurately report the information of the actual entrusting exporter or reports a non-actual producer/seller (e.g., a customs declaration company or freight forwarder), the export amount will be treated as its self-operated export. The agency enterprise will be obligated to bear the corresponding corporate income tax liability.
II. The Fatal Blow to the "Purchase for Export Declaration" Model
"Purchase for Export Declaration" refers to the practice where enterprises without import-export rights or those seeking to evade responsibility purchase declaration documents from others to export under their name. This practice will become unsustainable under Announcement 17:
Income Tax Risks Materialized: While "purchase" practices previously might have focused on customs and foreign exchange risks, Announcement 17 directly blocks the loophole from the corporate income tax aspect. Once the agency export enterprise discloses the true "actual production and sales unit," that unit must declare and pay corporate income tax on this export income. If the enterprise that purchased the declaration previously did not report this income, it will face risks of back taxes, late payment fees, and penalties.
Soaring Risks for Export Agency Enterprises: The new rules require export agency enterprises (e.g., comprehensive foreign trade service companies) to undertake the responsibility of identifying and disclosing the "actual entrusting exporter"1. If they continue to facilitate "purchase" businesses and fail to report information accurately, they will be forced to pay corporate income tax on the entire export business. The meager agency fee is negligible compared to the potential massive tax burden. This will force export agency enterprises to strictly review client qualifications and business authenticity, curbing "purchase" practices at the source.
Nowhere to Hide from Cross-Verification: Tax authorities can conduct cross-checks between information reported by agency export enterprises, income declared by production and sales enterprises, customs declaration data, and e-platform data. Any inconsistency will trigger alerts, exposing "purchase" practices.
III. Urgent Advice and Long-Term Strategies for Import-Export Enterprises
The implementation of Announcement 17 is a challenge but also an opportunity, pushing the market from "price competition" to "compliance competition."
Immediate Self-Inspection & Clarify Business Models: Enterprises should immediately review their export models. If they are still using "purchase" methods for export, they must stop as soon as possible. Assess the potential risks associated with past export income that was handled through "purchase" methods but not declared for income tax.
Obtain Qualifications & Become a Legal Entity: For SMEs with stable export business but without import-export rights, the priority is to immediately obtain Customs Import-Export Consignee/Consignor Registration to become a legitimate declaring entity and conduct export business in their own name.
Choose Compliant Agency Services: Enterprises that need to entrust export agencies must find compliant partners that provide formal customs declaration agency services. A formal agent acts on your behalf, declaring in your name (with you as the declaring entity); all legal responsibility remains with you, while the agent handles professional operations. Clearly define rights and obligations with the agent to ensure export income is declared for income tax by you.
Strengthen Internal Document Management: Establish a robust internal document management system to ensure consistency between contracts, invoices, packing lists, logistics documents, payment receipts, and declaration data and tax declaration data, ensuring they can withstand subsequent audits by various authorities.
Proactive Communication & Resolve Historical Risks: For potential income tax risks arising from historical "purchase" businesses, it is advisable to proactively communicate with professional tax advisors or the competent tax authorities to seek compliant solutions.
Conclusion
The implementation of STA Announcement No. 17 of 2025 is a significant measure to improve tax supervision and maintain a fair trade environment. It deals a fatal blow to the "Purchase for Export Declaration" model from the perspective of corporate income tax. For all import-export enterprises, completely abandoning the old "Purchase for Export Declaration" model and embracing compliant, transparent, and sunshine operations is no longer an option but a necessary path for survival and development. While compliance may increase short-term costs, it brings long-term security and broader development space.
KB Advisory possesses an expert team well-versed in tax and customs regulations. We can provide in-depth interpretation of Announcement 17, compliance solution design, and risk assessment services to help you transition smoothly under the new regulations and achieve steady progress. Please feel free to contact us for consultation.
