China Ends "Export Purchasing" Practice in Cross-Border Trade from October 1

China Ends "Export Purchasing" Practice in Cross-Border Trade from October 1

September 17, 2025 - In a significant move to standardize its cross-border trade, China will officially terminate the long-standing practice of "export purchasing"starting October 1, 2025. This decision, mandated by the National Taxation Administration's Announcement No. 17 of 2025, aims to curb tax evasion and enhance regulatory oversight in foreign trade operations

Key Changes Under the New PolicyThe new regulations require export agencies (including market procurement trade and comprehensive foreign trade services) to submit detailed information about the actual consignors and export values during pre-tax declaration. Failure to accurately report this information will result in the exporting agency being treated as the principal entity responsible for paying corporate income tax on the export value

This policy shift introduces a "penetrative supervision" model, where tax authorities can trace the actual owner of goods, ensuring transparency and accountability

What is "Export Purchasing"?"Export purchasing" refers to a practice where companies without export licenses or those seeking to simplify procedures purchase export documentation from enterprises with legitimate export rights to declare goods in the name of the latter. This model, prevalent in low-value, low-tax-rate product exports, allowed businesses to bypass formal processes but often led to tax revenue losses and non-compliance risks

Impacts on the IndustryIncreased Compliance Costs: Small and medium-sized enterprises relying on export purchasing must now formalize their operations by obtaining export licenses or partnering with compliant agencies.Penalties for Non-Compliance: Violators face fines ranging from 5% to 30% of the goods' value, downgraded credit ratings, and potential criminal liability.Level Playing Field: The policy aims to eliminate "bad money driving out good" and promote fair competition based on product quality and innovation

Recommended Compliance PathsSmall Sellers: Collaborate with正规代理 (formal agents) and maintain complete transaction records.Growing Sellers: Consider registering Hong Kong companies and partnering with foreign trade service enterprises.Mature Enterprises: Obtain independent import-export rights and establish full-chain tax rebate systems

Global ImplicationsChina's move to tighten export compliance is expected to reshape global supply chains, enhance the credibility of Chinese exports, and reduce risks of anti-dumping investigations.ConclusionThe end of "export purchasing" marks a critical step in China's journey toward high-quality trade development. Businesses must adapt to these changes promptly to avoid penalties and contribute to a more transparent and sustainable global trade ecosystem.

For more details, refer to the official National Taxation Administration Announcement No. 17 (2025).