Recently, multiple authorities including Customs, Taxation, Foreign Exchange and Public Security have kept strengthening joint inspections to rectify the long-standing grey non-compliant practice of document trading for exports in the foreign trade sector. Relying on Golden Tax IV and the customs data cross-check system, they carry out full-chain crackdowns on illegal activities such as customs declaration under borrowed entities, document trading with forged invoices, and fake trade arrangements to defraud export tax rebates. Numerous cases have been exposed across regions, marking that foreign trade supervision has entered a new phase of penetrating oversight.

Document trading means that the actual cargo owner, who lacks import and export qualifications or seeks tax avoidance, purchases the entity name of a shell company with foreign trade rights for customs declaration and export — this is known as “buying documents”. Selling documents refers to empty foreign trade firms with valid qualifications selling their declaration entity credentials and blank documents. Under this model, the declaring entity, actual cargo owner, fund flow and goods flow are disconnected. It constitutes inaccurate customs declaration and can easily breed crimes such as false invoicing, forex settlement via underground banks and export tax rebate fraud, which have long disrupted foreign trade order and caused loss of state tax revenue.

With the upgrading of the supervision system, a series of major policies took effect from 2025 to 2026, shrinking the room for document trading at the source. The General Administration of Customs and State Taxation Administration jointly issued an announcement for the online verification of electronic data of the Certificate of Tax Refund Recovered / Tax Refund Not Granted for Export Goods, effective January 1, 2026. Tax document data will be directly shared with customs to realize two-way comparison between declaration and tax rebate records. New supporting tax regulations require that agency export businesses must submit information of the genuine entrusting party, putting an end to the practice of “fake self-operation, genuine agency” and closing loopholes for shell companies to repeatedly lend their declaration entity names.

On the law enforcement front, major cases involving document trading and tax rebate fraud have been investigated intensively in the Pearl River Delta, Northeast China, Shanxi and other regions. Shenzhen tax authorities recently uncovered 3 enterprises that fabricated fruit export businesses through document trading and matching invoices, defrauding tax rebates of 6.31 million RMB. Recovered tax plus fines exceeded 12 million RMB, and the involved enterprises were suspended from export tax rebate eligibility for three years. In gang-related cases across many areas, criminals set up clusters of shell companies to sell declaration entity names in batches, together with false invoicing and fund backflow. Case values often reach tens of millions of RMB, and relevant offenders face criminal liabilities in accordance with law.

Customs inspectors explained that current supervision enables data interconnection among Customs, Tax, Foreign Exchange Administration and banks. The system can automatically compare customs declarations, input VAT invoices, fund records and forex receipt information to quickly identify document trading cases with inconsistent four flows. Once document trading violations are confirmed, enterprises will face seizure of goods, customs administrative penalties, back taxes, late fees and multiple fines. Severe tax fraud cases will be directly transferred to public security organs for criminal investigation. Freight forwarders and customs brokers who assist in document trading or conceal information of the real cargo owner shall also bear joint legal liability.

For small and medium-sized foreign trade enterprises, regulators are guiding market entities to adopt compliant solutions, including market procurement trade (1039), formal foreign trade agency services and self-applied import & export qualifications. Tax and CCPIT authorities remind foreign trade practitioners that there is no “safe operating margin” for document trading exports. Do not take chances. Freight and logistics companies are prohibited from accepting document-based customs declarations. Enterprises should upgrade their business models for compliance as soon as possible to mitigate personal legal risks for corporate representatives and actual controllers.

Industry insiders state that this rectification is not a short-term campaign, but an upgrade to regular supervision. The long-existing grey channel of document trading in foreign trade will keep tightening. The whole sector will fully shift toward compliant export models featuring genuine trade, consistent documents and identifiable trading entities.