1. What is non-settlement export through an agent?

"Non-settlement of foreign exchange under export agency" refers to the practice where a foreign trade agent, after completing the export of goods, does not convert the foreign exchange proceeds into RMB. According to the 2025 Implementing Rules for the Foreign Exchange Administration Regulations, this operation typically applies to the following scenarios:

• The overseas purchaser requests that the foreign exchange be retained for subsequent trade.
• Special trade modes (e.g., entrep?t trade, cross-border e-commerce)
• Demand for overseas investment capital allocation

Special attention required:Pursuant to the "Guidelines for Foreign Exchange Administration in Cross-Border Trade" revised by the People’s Bank of China in January 2025, export proceeds must, in principle, be settled within 90 days after the goods clear customs, except for special supervision areas such as bonded zones and pilot free-trade zones.

II. What is the operational procedure for export agency without foreign-exchange settlement?

Compliance operations must strictly follow the steps below (using general trade as an example):

• Sign a tripartite agreement to clearly define responsibilities
  • The agent and the principal agree on the foreign exchange retention period.
  • Overseas buyer confirms payment route
• 通関申告書に「一時的に外貨を交換しない」という特別マークが記載されている。
• Foreign exchange retained overseas must be reported to the local foreign exchange authority for record-filing.
  • Submit the "Extension of Foreign Exchange Receipt Filing Form"
  • Provide supporting documents evidencing the authenticity of the trade
• Include explanatory notes when filing the tax return

Important Reminder:The specific procedures may vary depending on the trade method and regional policies; it is advisable to consult the local commerce department and the State Administration of Foreign Exchange in advance.

III. What legal risks arise from not converting foreign exchange?

According to the latest judicial interpretation issued in 2025, the main risks include:

• Compliance Risk:
  • Violations of the Foreign Exchange Administration Regulations may be subject to a maximum fine of 30% of the amount of foreign exchange evaded.
  • Unrecorded operations may be placed on the key supervision list for foreign exchange business
• Tax Risk:
  • Failure to provide proof of settlement may result in loss輸出稅還付Qualification
  • Overstaying beyond the allowed period may be treated as domestic sales, requiring the payment of the value-added tax that would have been due.
• Joint and Several Liability of the Agent:
  • The agent may be jointly and severally liable for any additional tax owed.
  • May affect the customs credit rating (AEO certification could be downgraded)

IV. Compliant Methods for Handling Foreign Exchange Retained Overseas

Permitted alternatives for 2025 include:

• viaOffshore NRA AccountTemporary foreign exchange
  • A dedicated foreign exchange account needs to be opened
  • Submit account statements to the SAFE on a quarterly basis
• 適用するCross-border RMB settlement
• Applicable to countries that have signed a local-currency swap agreement with China
• Exempt from the foreign-exchange settlement process, but a cross-border payment declaration must still be completed.
• AdoptTrade Credit RegistrationDeferred receipt of foreign exchange
  • The maximum extension allowed is up to 360 days after export.
  • Registration must be completed within 30 days after the goods are exported.

5. What are the special considerations for tax filing?

As required by the State Taxation Administration Announcement No. 12 of 2025:

• 輸出稅還付The declaration must be submitted simultaneously with:
  • The "Proof of Foreign Exchange Receipt" issued by the State Administration of Foreign Exchange
  • Bank-issued Statement of Unsettled Foreign Exchange
• Corporate Income Tax Treatment:
  • Recognize revenue in RMB based on the exchange rate on the customs declaration date.
  • Exchange rate fluctuations are recorded under finance costs
• VAT Filing:
  • Un-settled foreign exchange does not affect the export tax exemption declaration
  • However, the foreign exchange must be received before the annual settlement and payment in April of the following year.

6. Is there a more reliable alternative?

It is recommended to prioritize the following compliant approaches:

• Formal agency export with foreign exchange settlement
  • After foreign exchange settlement, conduct outbound investment through ODI
  • Use cross-border cash pooling to mobilize funds
• Establish an overseas subsidiary
• Retaining funds through related-party transactions
• Must comply with the relevant transfer pricing regulations
• Adopt a cross-border e-commerce model
  • 「無票免稅」政策の適用
  • Settlement of foreign exchange in compliance through payment institutions

Special Notice:All operations described in this article must be carried out under the guidance of qualified attorneys and certified public accountants; actual cases may differ significantly across enterprises. Before commencing business, it is strongly recommended to seek specific advice from the local customs authority, the State Administration of Foreign Exchange, and the tax bureau.