＂China Customs＂ magazine published an article by the DHH Customs team-＂Cross-border e-commerce smuggling crime characteristics and prevention＂
Release time：2020-07-28 09:47
The customs team of Beijing DHH Law Firm went deep into the cross-border e-commerce industry and wrote a series of professional articles based on industry hotspots and pain points. Team members Donghai Shi, Zhuo Gong, and Jinnv Chi wrote "Characteristics and Prevention of Cross-border E-commerce Smuggling Crimes" published in the 6th issue of China Customs Journal in 2020 and synchronously pushed at China Customs on July 17, 2020, in the first article of the magazine's official account.
With the national policy encouragement and the deepening of international trade, the cross-border e-commerce industry has developed rapidly in recent years, and the subsequent cross-border e-commerce smuggling crime cases have also continued to appear. The risk of smuggling crimes in cross-border e-commerce operations cannot be ignored.
Introduction to cross-border e-commerce retail import trade methods
Broadly speaking, it can be called cross-border e-commerce as long as it is a transaction subject of different customs and the transaction is concluded through an e-commerce platform. From the perspective of customs supervision and anti-smuggling, cross-border e-commerce imports usually refer to cross-border e-commerce retail imports, that is, a consumption behavior which Chinese domestic consumers purchase goods from overseas through cross-border e-commerce third-party platform operators, and through "online shopping bonded import" ( Customs supervision method code 1210) or "direct purchase import" (customs supervision method code 9610) to transport into the country.
And the cross-border e-commerce mentioned in this article only refers to the act of importing goods through customs "online shopping bonded import" or "direct purchase import". Compared with other import methods such as general trade, cross-border e-commerce imports have their unique policies and models. At the customs level, its biggest characteristics can be summarized as "two advantages", "one restriction" and "one requirement".
Two advantages
According to the national cross-border e-commerce import regulations, importers choose cross-border e-commerce to import goods with many policy advantages, among which two are the most prominent:
01Regulatory conditions
The cross-border e-commerce retail imported goods are supervised as imported goods for personal use, and requirements of the first import license approval, registration, or record of the relevant goods are not applied.
02Tax policy
Imported goods can enjoy a lower tax rate within the single transaction limit and individual annual limit. According to the current regulations, for cross-border e-commerce retail imported goods, if a single transaction is within RMB 5,000 and the personal annual transaction limit is within RMB 26,000, the tariff rate is 0; import value-added tax and consumption tax are statutory taxable 70% of the amount is collected. Based on the 13% value-added tax of ordinary consumer goods, the tax rate of most cross-border e-commerce imports is 9.1%; for goods imported through general trade, the comprehensive tax rate of "tariff + value-added tax + consumption tax" can easily exceed 20%.
Limit
The so-called "one restriction" means that the state has made clear restrictions on the scope of enjoyment of the above conveniences and benefits. Domestic purchasers of cross-border e-commerce retail imported goods must be consumers rather than merchants, and the purchased goods are for personal use only, May not be sold again.
Claim
To realize the restriction that goods are restricted to retail imports (ie B2C), the customs have put forward a strict requirement when goods are imported: enterprises should transmit the information of transactions, payments, and logistics which is called "three bills" to the customs. If the bills are consistent, the customs can release.
Characteristics of cross-border e-commerce smuggling crime "brushing" is the main method of smuggling
Cross-border e-commerce imports can enjoy a lower tax rate, but this tax benefit is limited to goods for personal use by domestic consumers. To evade tax, some illegal merchants will import goods that are originally B2B and should be imported through general trade in the name and method of cross-border e-commerce retail import, and enjoy preferential tax rates that they cannot enjoy. Such a practice is a smuggling behavior of false reporting trade nature and is currently the most important type of smuggling crime in the cross-border e-commerce field. For example, the 14 cross-border e-commerce smuggling crime judgments and rulings published by Judgment Document Network are all of this type. The most typical way to implement this behavior is “brushing" that is, use the real identity information of others to place an order within the limit of a single transaction through the cross-border e-commerce transaction platform, enjoy preferential import tax rate, and the actual goods. The purchaser is not consistent with the nominal purchaser.
In April 2018, the "Guangzhou Zhidu Company Smuggling Case" judged by the Guangzhou Intermediate People's Court was called "the first case of cross-border e-commerce smuggling." The verdict showed that the company undertook import goods for general trade, and then falsely reported it as an individual overseas purchase of imported goods in the form of cross-border e-commerce trade, evading or underpaid taxes. To meet the requirements of consistency of "three bills ", the company acquired the identity information of others through illegal means and used various methods to produce false "three bills."
The specific method is to acquire the identity information of others through illegal means, develop Zhengluhuo.com, apply to become a cross-border e-commerce platform, create false personal order information, illegally obtained express orders, combine with personal orders to generate false logistics information, use a Beijing company to combine the above false information to make false payment information and push false "three bills" to the customs.
The court found that the company smuggled 19,000 imported goods in the above manner and evaded taxes totaling more than 2 million yuan. In the end, the company and the eight defendants were sentenced to different penalties.
Potential risks in price issues
In other cases of smuggling general goods through trade channels, under-reporting prices are the most important smuggling method. At present, in the field of cross-border e-commerce, cases of smuggling under-reported prices are rare, but the risks still cannot be ignored. According to relevant regulations, cross-border e-commerce companies should declare to the customs the actual transaction price of the product including the retail price, freight, and insurance.
Due to the requirements of the customs "three bills are consistent", under-reported prices are common in the import of goods with "push orders". For example, if a consumer places an order to purchase a product on a certain platform, the selling price of the product is 120 yuan; a cross-border e-commerce company generates "three bills" and transmits it to the customs according to the platform sales record, but the transmitted commodity price is 80 yuan, which is typical smuggling of under-reported prices in the cross-border e-commerce sector.
As a cross-border e-commerce company, it should be especially noted that the "record price" is not equal to the "actual transaction price". Under the "push order" and other modes, there is a situation where the company submitted the “record price” to the customs in advance before the commodity was imported. In the subsequent actual sales of goods, due to the fluctuation of the commodity transaction price, the actual transaction price may be lower than the record price due to discount promotion, or higher than the record price due to the price increase, but the company uniformly declares to the customs at the record price. In this case, the part where the actual transaction price is higher than the declared price is likely to be regarded as smuggling. Even if the purpose of the enterprise is mainly for ease of operation and not for tax evasion, it may still be deemed by the customs to be "intentional".
The subject of the crime involves multiple upstream and downstream links
In ordinary trade channel smuggling cases, the criminal subject is relatively single, usually only the owner of the goods and the agency that provides customs clearance services. Compared with traditional general trade, the cross-border e-commerce trade industry has a longer chain and more participants, including third-party operating platforms, logistics companies, payment companies, software developers, and multiple levels of supply chain companies. In addition to e-commerce companies, participants in other links may also constitute the main body of smuggling crime. For example, in the earlier mentioned case "Guangzhou Zhidu Company Smuggling Case", the defendants were including the cargo owner Wang, Liang in charge of the overseas solicitation, Zhidu Company responsible for customs clearance, and the person managing developing cross-border e-commerce platforms. Cheng and other subjects.
In another case of "Yuehua Company Smuggling General Goods", Guangdong Saiteng Logistics Co., Ltd. was used by Yuehua Company to make false logistics orders because it provided blank express orders and opened up express delivery platforms. Therefore, Saiteng Logistics Co., Ltd. was found by the court to assist with smuggling activities, and its behavior constituted the crime of smuggling ordinary goods, and the company and the main persons in charge were sentenced to penalties. Article 156 of Criminal Law stipulates: "Anyone who conspires with a smuggling criminal to provide him with loans, funds, account numbers, invoices, certificates, or provides him with transportation, custody, mail, or other conveniences, is the crime of smuggling. Accomplice punishment." According to relevant regulations and case-handling practices, the conspiracy here only needs to be "knowingly".
Nowadays, the market of the cross-border e-commerce industry is fiercely competitive. To retain customers, some companies provide related services to them, even knowing that their customers are smuggling. For example, some logistics companies provide "blank order delivery", which is used to make false logistics orders; some software companies develop software systems for customers that can import others' identity information to generate false orders; some e-commerce platforms open ports allowing customers to import sales data on other platforms, even if they know that customers use the port to engage in "brushing" smuggling; what’s more, there are e-commerce platforms that provide so-called special logistics services to assist customers in transporting cross-border e-commerce goods out of the bonded area... Although these companies and platforms are not the direct perpetrators of smuggling, and they charge customers only normal service fees and have not received additional benefits, they may still be regarded as accomplices in smuggling because of their knowing and helpful behavior.
Smuggling risk prevention in cross-border e-commerce operations
01
There is no secondary sale, Truly declared prices are the bottom line
As a cross-border e-commerce operator, it is necessary to ensure that the sales target is consumers who purchase for their use, rather than merchants who conduct secondary sales; at the same time, the price declared to the customs should be the actual transaction price of the commodity, and the price must be true and complete.
02
Business operation, compliance first
Cross-border e-commerce companies have many operating risks, and a little carelessness may constitute violations or even smuggling. Therefore, cross-border e-commerce companies should strengthen the construction of internal control and compliance systems, and pay attention to the design of trade processes and models; they should keep in mind that compliance is a priority, and do not seek temporary convenience or profit. If the company does not have professionals or strengths, it can consider hiring an external professional team to assist in risk review, control, and handling.
03
Participants in upstream and downstream links should be alert to risks
The General Administration of Customs Announcement No. 194 of 2018 (Announcement on Supervision Matters Concerning Cross-border E-commerce Retail Import and Export Commodities) requires that platform companies, payment companies, logistics companies, etc. should be registered with the customs, and the above-mentioned companies are included in the customs for the first time, which managed the category of the counterpart. In cross-border e-commerce imports, ensuring the truthfulness of the declared information is no longer just a matter of the goods and customs brokers. In terms of ensuring the truthfulness of the "three bills", upstream and downstream enterprises will assume more responsibilities and obligations, which also means that they will face greater legal risks and should be more vigilant and careful.
Text | Donghai Shi Zhuo Gong Jinnv Chi
(Beijing DHH Law Firm)
With the national policy encouragement and the deepening of international trade, the cross-border e-commerce industry has developed rapidly in recent years, and the subsequent cross-border e-commerce smuggling crime cases have also continued to appear. The risk of smuggling crimes in cross-border e-commerce operations cannot be ignored.
Introduction to cross-border e-commerce retail import trade methods
Broadly speaking, it can be called cross-border e-commerce as long as it is a transaction subject of different customs and the transaction is concluded through an e-commerce platform. From the perspective of customs supervision and anti-smuggling, cross-border e-commerce imports usually refer to cross-border e-commerce retail imports, that is, a consumption behavior which Chinese domestic consumers purchase goods from overseas through cross-border e-commerce third-party platform operators, and through "online shopping bonded import" ( Customs supervision method code 1210) or "direct purchase import" (customs supervision method code 9610) to transport into the country.
And the cross-border e-commerce mentioned in this article only refers to the act of importing goods through customs "online shopping bonded import" or "direct purchase import". Compared with other import methods such as general trade, cross-border e-commerce imports have their unique policies and models. At the customs level, its biggest characteristics can be summarized as "two advantages", "one restriction" and "one requirement".
Two advantages
According to the national cross-border e-commerce import regulations, importers choose cross-border e-commerce to import goods with many policy advantages, among which two are the most prominent:
01Regulatory conditions
The cross-border e-commerce retail imported goods are supervised as imported goods for personal use, and requirements of the first import license approval, registration, or record of the relevant goods are not applied.
02Tax policy
Imported goods can enjoy a lower tax rate within the single transaction limit and individual annual limit. According to the current regulations, for cross-border e-commerce retail imported goods, if a single transaction is within RMB 5,000 and the personal annual transaction limit is within RMB 26,000, the tariff rate is 0; import value-added tax and consumption tax are statutory taxable 70% of the amount is collected. Based on the 13% value-added tax of ordinary consumer goods, the tax rate of most cross-border e-commerce imports is 9.1%; for goods imported through general trade, the comprehensive tax rate of "tariff + value-added tax + consumption tax" can easily exceed 20%.
Limit
The so-called "one restriction" means that the state has made clear restrictions on the scope of enjoyment of the above conveniences and benefits. Domestic purchasers of cross-border e-commerce retail imported goods must be consumers rather than merchants, and the purchased goods are for personal use only, May not be sold again.
Claim
To realize the restriction that goods are restricted to retail imports (ie B2C), the customs have put forward a strict requirement when goods are imported: enterprises should transmit the information of transactions, payments, and logistics which is called "three bills" to the customs. If the bills are consistent, the customs can release.
Characteristics of cross-border e-commerce smuggling crime "brushing" is the main method of smuggling
Cross-border e-commerce imports can enjoy a lower tax rate, but this tax benefit is limited to goods for personal use by domestic consumers. To evade tax, some illegal merchants will import goods that are originally B2B and should be imported through general trade in the name and method of cross-border e-commerce retail import, and enjoy preferential tax rates that they cannot enjoy. Such a practice is a smuggling behavior of false reporting trade nature and is currently the most important type of smuggling crime in the cross-border e-commerce field. For example, the 14 cross-border e-commerce smuggling crime judgments and rulings published by Judgment Document Network are all of this type. The most typical way to implement this behavior is “brushing" that is, use the real identity information of others to place an order within the limit of a single transaction through the cross-border e-commerce transaction platform, enjoy preferential import tax rate, and the actual goods. The purchaser is not consistent with the nominal purchaser.
In April 2018, the "Guangzhou Zhidu Company Smuggling Case" judged by the Guangzhou Intermediate People's Court was called "the first case of cross-border e-commerce smuggling." The verdict showed that the company undertook import goods for general trade, and then falsely reported it as an individual overseas purchase of imported goods in the form of cross-border e-commerce trade, evading or underpaid taxes. To meet the requirements of consistency of "three bills ", the company acquired the identity information of others through illegal means and used various methods to produce false "three bills."
The specific method is to acquire the identity information of others through illegal means, develop Zhengluhuo.com, apply to become a cross-border e-commerce platform, create false personal order information, illegally obtained express orders, combine with personal orders to generate false logistics information, use a Beijing company to combine the above false information to make false payment information and push false "three bills" to the customs.
The court found that the company smuggled 19,000 imported goods in the above manner and evaded taxes totaling more than 2 million yuan. In the end, the company and the eight defendants were sentenced to different penalties.
Potential risks in price issues
In other cases of smuggling general goods through trade channels, under-reporting prices are the most important smuggling method. At present, in the field of cross-border e-commerce, cases of smuggling under-reported prices are rare, but the risks still cannot be ignored. According to relevant regulations, cross-border e-commerce companies should declare to the customs the actual transaction price of the product including the retail price, freight, and insurance.
Due to the requirements of the customs "three bills are consistent", under-reported prices are common in the import of goods with "push orders". For example, if a consumer places an order to purchase a product on a certain platform, the selling price of the product is 120 yuan; a cross-border e-commerce company generates "three bills" and transmits it to the customs according to the platform sales record, but the transmitted commodity price is 80 yuan, which is typical smuggling of under-reported prices in the cross-border e-commerce sector.
As a cross-border e-commerce company, it should be especially noted that the "record price" is not equal to the "actual transaction price". Under the "push order" and other modes, there is a situation where the company submitted the “record price” to the customs in advance before the commodity was imported. In the subsequent actual sales of goods, due to the fluctuation of the commodity transaction price, the actual transaction price may be lower than the record price due to discount promotion, or higher than the record price due to the price increase, but the company uniformly declares to the customs at the record price. In this case, the part where the actual transaction price is higher than the declared price is likely to be regarded as smuggling. Even if the purpose of the enterprise is mainly for ease of operation and not for tax evasion, it may still be deemed by the customs to be "intentional".
The subject of the crime involves multiple upstream and downstream links
In ordinary trade channel smuggling cases, the criminal subject is relatively single, usually only the owner of the goods and the agency that provides customs clearance services. Compared with traditional general trade, the cross-border e-commerce trade industry has a longer chain and more participants, including third-party operating platforms, logistics companies, payment companies, software developers, and multiple levels of supply chain companies. In addition to e-commerce companies, participants in other links may also constitute the main body of smuggling crime. For example, in the earlier mentioned case "Guangzhou Zhidu Company Smuggling Case", the defendants were including the cargo owner Wang, Liang in charge of the overseas solicitation, Zhidu Company responsible for customs clearance, and the person managing developing cross-border e-commerce platforms. Cheng and other subjects.
In another case of "Yuehua Company Smuggling General Goods", Guangdong Saiteng Logistics Co., Ltd. was used by Yuehua Company to make false logistics orders because it provided blank express orders and opened up express delivery platforms. Therefore, Saiteng Logistics Co., Ltd. was found by the court to assist with smuggling activities, and its behavior constituted the crime of smuggling ordinary goods, and the company and the main persons in charge were sentenced to penalties. Article 156 of Criminal Law stipulates: "Anyone who conspires with a smuggling criminal to provide him with loans, funds, account numbers, invoices, certificates, or provides him with transportation, custody, mail, or other conveniences, is the crime of smuggling. Accomplice punishment." According to relevant regulations and case-handling practices, the conspiracy here only needs to be "knowingly".
Nowadays, the market of the cross-border e-commerce industry is fiercely competitive. To retain customers, some companies provide related services to them, even knowing that their customers are smuggling. For example, some logistics companies provide "blank order delivery", which is used to make false logistics orders; some software companies develop software systems for customers that can import others' identity information to generate false orders; some e-commerce platforms open ports allowing customers to import sales data on other platforms, even if they know that customers use the port to engage in "brushing" smuggling; what’s more, there are e-commerce platforms that provide so-called special logistics services to assist customers in transporting cross-border e-commerce goods out of the bonded area... Although these companies and platforms are not the direct perpetrators of smuggling, and they charge customers only normal service fees and have not received additional benefits, they may still be regarded as accomplices in smuggling because of their knowing and helpful behavior.
Smuggling risk prevention in cross-border e-commerce operations
01
There is no secondary sale, Truly declared prices are the bottom line
As a cross-border e-commerce operator, it is necessary to ensure that the sales target is consumers who purchase for their use, rather than merchants who conduct secondary sales; at the same time, the price declared to the customs should be the actual transaction price of the commodity, and the price must be true and complete.
02
Business operation, compliance first
Cross-border e-commerce companies have many operating risks, and a little carelessness may constitute violations or even smuggling. Therefore, cross-border e-commerce companies should strengthen the construction of internal control and compliance systems, and pay attention to the design of trade processes and models; they should keep in mind that compliance is a priority, and do not seek temporary convenience or profit. If the company does not have professionals or strengths, it can consider hiring an external professional team to assist in risk review, control, and handling.
03
Participants in upstream and downstream links should be alert to risks
The General Administration of Customs Announcement No. 194 of 2018 (Announcement on Supervision Matters Concerning Cross-border E-commerce Retail Import and Export Commodities) requires that platform companies, payment companies, logistics companies, etc. should be registered with the customs, and the above-mentioned companies are included in the customs for the first time, which managed the category of the counterpart. In cross-border e-commerce imports, ensuring the truthfulness of the declared information is no longer just a matter of the goods and customs brokers. In terms of ensuring the truthfulness of the "three bills", upstream and downstream enterprises will assume more responsibilities and obligations, which also means that they will face greater legal risks and should be more vigilant and careful.
Text | Donghai Shi Zhuo Gong Jinnv Chi
(Beijing DHH Law Firm)