Guidance on Declaring Domestic Freight and Insurance Costs for Export Customs Declarations Under EXW Terms
Preface
Recently, the "China International Trade Single Window" system has added a new prompt for export declarations with the trade term EXW: "For declarations with the EXW trade term, the transportation costs, related fees, and insurance premiums incurred from the domestic factory to the loading point at the place of export within the People's Republic of China must be entered in the 'Other Charges' column." To help enterprises accurately understand the regulations and declare compliantly, this article introduces some key considerations for declaring these domestic transportation and insurance costs for export declarations under the EXW trade term.
1. Definition of the Customs Value for Export Goods
According to Article 29 of the "Customs Law of the People's Republic of China," the customs value for export goods is determined based on the transaction value of the goods plus the transportation costs, related fees, and insurance premiums incurred to bring the goods to the loading point at the place of export within the People's Republic of China.
It can be seen that the customs value for export goods consists of three parts: the transaction value of the goods, and the transportation and insurance costs ("Domestic Transport & Insurance") incurred before loading at the place of export. Please note that for trade terms like FOB, these domestic transport and insurance costs are already included and should not be double-counted.
2. Key Points of the EXW Trade Term
EXW is the abbreviation for EX Works, an international trade term meaning "ex-works." It means that the seller makes the goods available at a named place (e.g., factory or warehouse) to the buyer or the buyer's nominated freight forwarder. This named place is not limited to the seller's premises. EXW is the term where the seller bears the minimum obligations, costs, and risks. The relevant responsibilities are detailed as follows:
Seller's Main Obligations: Package and mark the goods and bear the related costs (unless packaging is not necessary); place the goods, not loaded onto any collecting vehicle, at the disposal of the buyer at the named place of delivery on the agreed date or within the agreed period; provide the buyer with available information related to the goods, commercial invoice, transport safety requirements, and information needed by the buyer for obtaining insurance; assist the buyer in carrying out customs clearance, etc.
Buyer's Main Obligations: Pay the price of the goods; bear all costs and risks from taking the goods at the seller's named place to the final destination, including handling export customs formalities, transport from the factory to the port of export, insurance, loading costs, etc.
Price Composition: Based on the meaning of the term and the buyer's obligations, the EXW transaction value does not include any costs occurring after the goods are delivered by the seller at the named place (factory, warehouse, works, etc.), nor does it include any loading costs.
In summary, under the EXW trade term, the export transaction value does not include costs such as transportation and insurance from the domestic factory to the loading point at the place of export within China. Therefore, this transaction value is not the customs value. The aforementioned costs must be declared separately and included in the export customs value.
3. Declaration Considerations
I. Declaration Responsibility
According to the EXW term, the buyer is responsible for handling export customs formalities and bearing the costs of transport, insurance, and loading from the named place of delivery to the port of export. If the buyer does not have the qualification to declare export goods, they must still provide their agent with proof of the transportation costs, related fees, and insurance premiums incurred before loading at the place of export. The seller may, at the buyer's request, assist the buyer with customs clearance.
II. Declaration Operation Guide
According to the "Specifications for Filling out the Customs Declaration Form for Import and Export Goods of the People's Republic of China," the requirements for filling out the Freight, Insurance, and Other Charges columns are as follows:
Freight Column: Enter the transportation costs for the export goods after loading at the place of export within China. That is, domestic segment transport costs cannot be entered in this column.
Insurance Column: Enter the insurance costs for the export goods after loading at the place of export within China. That is, domestic segment insurance costs cannot be entered in this column.
Other Charges Column: Enter costs other than the transaction value that, according to the relevant provisions of the "Customs Law of the People's Republic of China," should be added to or deducted from the customs value.
Since the domestic transport and insurance costs under the EXW term must be included in the export customs value, these costs must be declared in the "Other Charges" column. Furthermore, under EXW, the transaction value does not include freight and insurance after loading. To reduce declaration errors, the system grays out the Freight and Insurance columns for EXW declarations.
4. Frequently Asked Questions
(1) If the domestic seller does not bear the domestic transport and insurance costs but assists with customs clearance, does the 'Other Charges' column still need to be filled?
Yes. Under the EXW term, the buyer is responsible for handling export customs formalities and bearing the costs of transport, insurance, etc., from the named place of delivery to the port of export. If the seller accepts the buyer's entrustment to handle customs clearance, they should request the buyer to provide proof of the transportation costs, related fees, and insurance premiums incurred before loading at the place of export.
(2) Does the export duty paid need to be declared?
No. According to Article 29 of the "Customs Law of the People's Republic of China," export duties are not included in the customs value.
Example:
An enterprise exports a batch of mechanical equipment.
Declared EXW transaction value: 1,000,000 RMB.
Domestic transport cost: 5,000 RMB; Domestic insurance cost: 1,000 RMB.
Customs determines the export duty rate for this commodity is 5%.
The enterprise actually pays export duty: 50,300 RMB (Customs Value: 1,006,000 RMB × 5%).
(3) How to declare when the transport and insurance costs include expenses incurred after loading at the place of export?
According to Article 40, Paragraph 2 of the "Measures of the People's Republic of China on the Determination of Customs Value for Import and Export Goods," transportation costs, related fees, and insurance premiums specifically listed in the goods' price that are incurred after loading at the place of export within China are not included in the customs value for export goods. Therefore, if the enterprise can provide proof of transport/insurance costs specifically listed as occurring after loading at the place of export, or other objective and reasonable allocation basis, the "Other Charges" column should only include the corresponding domestic segment costs incurred before loading.
Example:
International freight: 900 RMB; International insurance: 180 RMB.
Therefore, the total 1,000 RMB freight includes Domestic (100 RMB) + International (900 RMB).
The total 200 RMB insurance includes Domestic (20 RMB) + International (180 RMB).
An enterprise exports chemical raw materials under an EXW contract.
EXW transaction value: 50,000 RMB.
The buyer actually pays total freight: 1,000 RMB; Total insurance: 200 RMB.
The enterprise incorrectly declared 1,200 RMB in the "Other Charges" column.
Verification: The proof provided by the buyer shows:
Assuming no other items need adding to the customs value, the "Other Charges" column should be 120 RMB (Domestic freight 100 RMB + Domestic insurance 20 RMB).
Accurately declaring domestic transport and insurance costs for EXW exports is a crucial step in determining the customs value for export goods and fulfilling corporate compliance obligations. Export enterprises should thoroughly understand the EXW term and the concept of customs value, strictly follow declaration specifications, and properly retain relevant transaction, transport, and payment documents. Customs will continue to optimize services to facilitate a smooth and compliant export path for enterprises. For any questions, please contact the Customs 12360 Hotline or your local customs authority.
