Recently, numerous customs brokerage firms, freight forwarders and export enterprises have received customs audit notices requiring explanations on the reasons for changing customs declaration entities, disclosure of whether the actual goods owners were concealed, and confirmation of any export declarations without physical goods. Against the backdrop of strengthened cross-departmental joint supervision by customs and tax authorities nationwide, alongside mandatory expansion of information disclosure obligations covering entrusting exporters, customs brokers and other service providers, the room for survival of all non-compliant document purchasing practices from past years has been drastically narrowed. Legal risks for market players including actual goods owners, export enterprises and customs brokers are erupting simultaneously across multiple fronts. In light of this, this article analyzes the distinct legal risks arising from three types of document purchasing activities – general document purchasing for export, document purchasing to defraud export tax rebates, and document purchasing to defraud fiscal subsidies – for readers’ reference.

I. Legal Risks of General Document Purchasing for Export

Document purchasing for export refers to an act whereby small and medium-sized enterprises, individual operators and other actual goods owners purchase customs declaration documents from other export enterprises and declare exports to customs under the names of those enterprises. The primary incentive for this practice is to avoid heavy corporate income tax burdens, and it generally bears no connection to illicitly claiming export tax rebates. Even if the goods exported by the actual goods owners qualify for tax exemption policies, compliant special VAT invoices are often unavailable for procurement links, making it impossible to deduct costs before tax. If exports are declared under their own corporate names, all overseas sales revenue will be subject to tax without corresponding supporting cost vouchers, resulting in a substantially higher corporate income tax burden. For this reason, such operators tend to adopt document purchasing for exports: they alter the domestic consignor and production/sales entity information on customs declarations to other export enterprises, collect overseas payments via personal bank accounts, and operate capital flows outside corporate public accounts to conceal taxable income and evade corporate income tax liabilities.

Most export enterprises offering document purchasing services are shell companies registered by professional document scalpers with no genuine business operations, filing zero tax returns or failing to file taxes over the long term. After collecting substantial document service fees, these shell entities abscond and lose contact. In practice, some customs brokers act as intermediary brokers between actual goods owners and shell enterprises controlled by document scalpers: on one hand, they connect with actual goods owners seeking tax avoidance solutions; on the other hand, they maintain a pool of shell export enterprises controlled by professional scalpers, actively facilitate the trading of customs documents and earn intermediary commissions. Moreover, during customs declaration procedures, they knowingly cooperate to alter document information and submit false declarations despite awareness of discrepancies between the actual goods owners and the domestic consignors/production entities stated on customs declarations.

(i) Legal Risks for Customs Brokers

To rectify rampant false declaration practices in the customs brokerage industry, the General Administration of Customs issued a public consultation draft on May 14, 2026 titled Announcement of the General Administration of Customs on Matters Concerning Customs Brokers’ Statutory Duty of Reasonable Examination (Draft for Comments) (hereinafter the “Draft Comments”), which tightens substantive review obligations. It mandates that customs brokers conduct reasonable examinations into the authenticity, validity and completeness of information provided by their clients. Where customs brokers fail to reasonably verify the authenticity of information submitted by consignees and consignors as required, customs authorities may impose penalties pursuant to Article 17 of the Regulations on Administrative Penalties for Customs Administration: “Where a customs broker or declarer fails to conduct a reasonable examination into the authenticity of information provided by the client, or causes circumstances specified in Article 15 of these Regulations due to negligence, the customs broker may be fined an amount not exceeding 10% of the value of the goods, and suspended from customs brokerage activities for a maximum of six months; if the circumstances are serious, the broker shall be prohibited from engaging in customs brokerage.” Concurrently, customs authorities may adjust the credit rating of the customs broker in accordance with the Measures for Credit Administration of Enterprises Registered, Recorded and Filed with Customs.

(ii) Legal Risks for Actual Goods Owners

During customs audits, customs brokers will typically disclose the identities of actual goods owners to customs authorities to demonstrate fulfillment of substantive review obligations and mitigate their own penalties. Customs authorities will then demand explanations from the actual goods owners regarding the reasons for switching customs declaration entities, as well as the genuine relationship between the owners and the domestic consignors/production entities named on customs declarations. If the actual goods owners cannot provide a reasonable explanation, customs authorities may determine that they have engaged in the purchase of customs documents for export. Pursuant to Article 24 of the Regulations on Administrative Penalties for Customs Administration, “Anyone who buys or sells customs documents shall be fined not less than RMB 50,000 nor more than RMB 500,000; any illegal gains shall be confiscated; if a crime is constituted, criminal liability shall be pursued in accordance with the law.” Corresponding fines will be imposed, and clues of the illegal conduct will be concurrently transferred to tax authorities.

Separately, all revenue generated from exported goods legally belongs to the actual goods owners, who are obligated to truthfully file and pay corporate income tax. Failure to truthfully declare and pay corporate income tax will trigger tax recovery and late payment surcharges by tax authorities. Under Article 63 of the Tax Collection and Administration Law, such conduct will be classified as tax evasion, attracting fines ranging from 50% to five times the underpaid tax amount. If the actual goods owners refuse to settle outstanding taxes, surcharges and fines, administrative liability for tax evasion will escalate to criminal liability for the crime of tax evasion.

(iii) Legal Risks for Export Enterprises Selling Customs Documents

For shell export enterprises selling customs documents, two layers of liability apply:First, since the goods declared to customs are not exported by the enterprises themselves, this constitutes untruthful import and export declaration. Pursuant to the first paragraph of Article 24 of the Customs Law, “For untruthful declarations of import and export goods, fines shall be imposed and any illegal gains confiscated.” Customs authorities will confiscate all document service fees collected by the export enterprise and impose additional fines.Second, export enterprises knowingly alter customs declaration entity information and assist actual goods owners in export declarations, thereby enabling the owners to underpay or evade taxes. Pursuant to Article 93 of the Implementing Rules for the Tax Collection and Administration Law, “Anyone who illegally provides convenience to taxpayers… resulting in underpayment or non-payment of taxes… tax authorities shall confiscate their illegal gains and may impose a fine of up to one times the amount of taxes unpaid or underpaid.” Corresponding fines will be levied against such export enterprises.

II. Legal Risks of Document Purchasing to Defraud Export Tax Rebates

Document purchasing to defraud export tax rebates refers to conduct whereby export enterprises purchase information on goods exported by actual owners, pair this information with falsely issued special VAT invoices, fabricate the appearance of genuine goods exports, and thereby fraudulently claim state export tax rebates. Its sole primary objective is to illegally obtain export tax rebate proceeds, making it a top priority for national crackdown operations. At a special press conference held by the Ministry of Public Security in Beijing on May 20, 2026, authorities noted that since 2025, public security organs have closely tracked shifts in tax-related criminal trends and intensified crackdowns on export tax rebate fraud under the regular joint anti-tax-evasion mechanism involving eight state departments. Since 2025, public security organs nationwide have filed over 300 cases of tax rebate fraud, with the total direct economic losses recovered in the current year rising by 20.8% year-on-year.

The operational model of document purchasing for tax rebate fraud proceeds in three steps: First, export enterprises source genuine export shipments from owners who do not claim tax rebates, illegally obtain data on others’ exported goods (i.e., purchasing documents), and graft these unrelated export transactions onto their own corporate records. Second, they pay invoice service fees to third parties to obtain falsely issued special VAT invoices matching the purchased document data (invoice matching). Third, they fabricate foreign exchange receipts via underground banks: upon receiving foreign exchange funds, they remit the funds to upstream invoice issuers, which circulate the money through multiple layers before flowing back to accounts controlled by underground banks to create a false paper trail of foreign exchange collection (foreign exchange matching). Together, these steps manufacture the illusion of genuine physical exports, allowing enterprises to submit customs declarations and false VAT invoices to tax authorities to fraudulently claim export tax rebates.

(i) Legal Risks for Export Enterprises

For export enterprises, this conduct constitutes export tax rebate fraud. At the administrative level, tax authorities will apply Article 66 of the Tax Collection and Administration Law: “Whoever fraudulently obtains state export tax rebates by making false export declarations or other deceptive means shall have the fraudulently obtained rebates recovered, and be fined an amount ranging from one to five times the defrauded tax amount; if a crime is constituted, criminal liability shall be pursued in accordance with the law. Tax authorities may suspend export tax rebate eligibility for a specified period for enterprises that defraud export tax rebates.” Tax rebates wrongfully claimed will be recovered, fines imposed, and export tax rebate privileges suspended. If the defrauded tax amount exceeds RMB 100,000, judicial authorities will pursue criminal liability for the crime of fraudulently obtaining export tax rebates.

(ii) Legal Risks for Customs Brokers

For customs brokers, liability for facilitating document trading, altering documents and submitting false customs declarations is determined based on whether they colluded in advance to perpetrate tax rebate fraud. The 2024 March Judicial Interpretation by the Supreme People’s Court and Supreme People’s Procuratorate introduced major revisions to the constitutive elements of export tax rebate fraud and added new provisions governing liability for intermediaries: “Intermediary organizations and their personnel engaged in freight forwarding, customs brokerage and similar services that violate national import and export regulatory provisions by providing false certification documents to others, enabling others to fraudulently obtain state export tax rebates in serious circumstances, shall be held criminally liable in accordance with Article 229 of the Criminal Law.” This provision targets document-selling conduct by customs brokers and other intermediaries. If a customs broker merely assists in issuing false documents without prior collusion to commit tax rebate fraud, it risks criminal liability for the crime of providing false certification documents. If the broker conspires beforehand and participates jointly in tax rebate fraud, it will face criminal liability as an accomplice to the crime of fraudulently obtaining export tax rebates. At the administrative level, brokers will still face fines and credit rating downgrades as outlined in Section I above.

(iii) Legal Risks for Actual Goods Owners

For actual goods owners, if they knowingly provide their export goods information to export enterprises for document-based tax rebate fraud, they face criminal risk as accomplices to the crime of fraudulently obtaining export tax rebates. At the administrative level, actual goods owners who voluntarily provide export data in exchange for kickbacks will bear administrative liability for buying and selling customs documents as outlined earlier. Additionally, failure to truthfully file tax returns will trigger obligations to settle outstanding taxes, late payment surcharges and fines for tax evasion.

III. Legal Risks of Document Purchasing to Defraud Fiscal Foreign Trade Subsidies

Beyond general document purchasing for export and document purchasing for tax rebate fraud, a third prevalent illegal practice is document purchasing to defraud fiscal foreign trade subsidies. This refers to conduct whereby export enterprises purchase data on goods exported by actual owners, fabricate records of genuine exports to inflate trade volume statistics, and fraudulently apply for local fiscal foreign trade subsidy funds. Its sole objective is to illegally obtain substantial fiscal subsidies, with no connection to export tax rebate fraud.

In recent years, local governments nationwide have rolled out foreign trade incentive policies to boost exports and meet annual import and export growth assessment targets. Cash subsidies and supporting fiscal preferential treatments are disbursed to enterprises based on their annual export turnover to support local foreign trade businesses in expanding export scale. Some illegal actors register shell export enterprises in regions offering generous foreign trade support policies for the sole purpose of defrauding large subsidy sums. They purchase customs declaration documents from actual goods owners and customs brokers nationwide, unilaterally alter entity information on customs declarations, fabricate inflated export performance records, and submit fraudulent applications for fiscal subsidies.

(i) Legal Liability for Export Enterprises

Export enterprises that purchase customs documents to fabricate trade records and embezzle fiscal subsidies face criminal liability for fraud. The criminal filing threshold for fraud generally ranges from RMB 3,000 to RMB 5,000 – far lower than the threshold for prosecuting export tax rebate fraud – exposing such export enterprises to more severe criminal risks. In (2020) Yue Xing Zhong No. 1604 heard by the Higher People’s Court of Guangdong Province, defendant Xu Mouwen purchased customs documents to fabricate export trade records under 13 shell companies registered in Zhongshan City that conducted no genuine import and export operations, defrauding over RMB 28.74 million in special foreign trade fiscal funds. Ultimately, Xu was convicted of fraud and sentenced to fixed-term imprisonment of ten years with an accompanying fine.

(ii) Legal Risks for Customs Brokers

If a customs broker merely facilitates document trading and assists export enterprises in altering declaration documents and submitting false customs filings, it risks criminal liability for the crime of providing false certification documents. If the broker subjectively knows the export enterprise intends to defraud fiscal subsidies via document purchasing and actively assists the fraud, it will be deemed an accomplice to the crime of fraud. At the administrative level, brokers will face fines and credit rating downgrades as specified in preceding sections.

(iii) Legal Risks for Actual Goods Owners

Criminally, actual goods owners who subjectively know and objectively participate in an export enterprise’s subsidy fraud scheme risk conviction for fraud. Administratively, they bear liability for buying and selling customs documents as outlined earlier, alongside obligations to settle underpaid taxes, late payment surcharges and tax evasion fines arising from concealed overseas sales revenue.

IV. Conclusion

Currently, deep cross-departmental big data information sharing and an upgraded regular joint anti-tax-violation mechanism involving eight central government departments, paired with continuously refined import and export regulatory policies, have drastically raised the cost of all illegal import and export tax-related activities. Under this new regulatory landscape, export enterprises, actual goods owners, customs brokers and other intermediary service providers face layered and multi-dimensional legal risks. When confronted with customs administrative penalties, tax recovery orders, tax evasion/tax rebate fraud determinations, or criminal indictments alleging crimes of fraudulently obtaining export tax rebates or fraud, relevant parties should respond proactively at the earliest opportunity and retain professional tax lawyers to intervene in case handling, striving for favorable case outcomes.