Under the new development pattern that gives equal importance to globalization and domestic demand, more and more manufacturing enterprises are choosing a dual-track strategy of cross-border business plus domestic sales. They expand overseas markets through platforms such as Amazon and AliExpress, while also cultivating the domestic market through Douyin, Taobao, and Pinduoduo. However, while this two-legged approach brings growth dividends, it also places higher demands on enterprises' financial accounting and tax compliance capabilities.

Especially under the background of the comprehensive upgrade of tax supervision in 2025 and the normalization of penetrating inspections under Phase IV of Golden Tax, failure to scientifically distinguish the accounting treatment of domestic and overseas sales can easily trigger high-risk problems such as mixed use of input tax, failure of export tax refunds, concealed revenue, and profit shifting. In minor cases, this may lead to back taxes and fines; in severe cases, it may affect corporate credit or even trigger criminal liability.

This article systematically analyzes how to achieve compliant separation of finance and taxation for cross-border business and domestic sales, helping enterprises build a strong risk-control foundation and release the potential of dual-engine growth.

I. Why must separate accounting be established? Policy and risk are both forcing the issue

According to the Interim VAT Regulations and relevant export tax refund rules, domestic sales are subject to VAT rates of 13% or 9%, while exports follow the policy of exemption, offset, and refund. The two differ fundamentally in tax treatment:

Domestic sales require VAT special invoices to be issued, and output tax can offset input tax.

Export sales are exempt from output tax, and qualified enterprises may apply for refunds of input tax.

If an enterprise does not account for the two types of business separately, the tax authority may levy tax on the full amount as domestic sales and deny export tax refunds. More seriously, if the enterprise is identified as engaging in proxy exports or receiving payments through private accounts, it may face back taxes based on deemed domestic sales, late payment surcharges, and fines ranging from 0.5. to 5. times the tax amount.

In addition, the announcements implemented from 2025 clearly require cross-border e-commerce to achieve integration of the four flows, namely contract flow, goods flow, capital flow, and invoice flow. Platform transaction data are already directly connected to tax systems, and any inconsistency will trigger warnings.

II. How should financial accounts be set up? Clear separate accounting is the foundation of compliance

To achieve compliant separation, enterprises must first establish a clear account structure at the accounting subject level:

1. Separate revenue and cost accounts

Under main business revenue, set secondary accounts for domestic sales and export sales.

Under main business cost, distinguish costs of domestic and export sales accordingly.

Under inventory goods, classify items such as domestic sales - Product A and export sales - Product B to avoid mixed inventory.

2. Refined VAT accounts

Under taxes payable - VAT payable, add detailed items such as:

Output tax - domestic sales

Export tax refund

Input tax transfer out, for the non-refundable portion

Input tax - domestic sales and input tax - export sales should be collected separately.

The key point is that the input tax on raw materials used for export sales must be separately collected for refund declaration. If it cannot be accurately distinguished, it will be excluded according to the domestic sales ratio, leading to refund losses.

3. Special accounting for additional deduction of R&D expenses

As shown by practical cases, enterprises need to establish ledgers for R&D projects, distinguish R&D input by product line or market direction, and retain compliant evidence such as project approval, project completion, and cost collection, so as to ensure the smooth implementation of additional deductions.

III. Key compliance points in three major tax handling scenarios

Scenario 1: How can invoice-free procurement be handled compliantly?

Many cross-border sellers purchase from farmers or small workshops and cannot obtain VAT special invoices. In such cases, they may adopt:

A pilot-zone individual business model, which enjoys invoice-free tax exemption plus 4% deemed taxation, applicable to annual sales below RMB 5. million.

A Hong Kong procurement company structure, under which an overseas entity procures from domestic invoice-free suppliers and records entries through pro forma invoices, thereby avoiding the problem of missing domestic input invoices.

However, it should be noted that after 2025, proxy export has been explicitly prohibited. All exports must be declared in the enterprise's own name, otherwise they will be treated as domestic sales for taxation.

Scenario 2: Revenue recognition on e-commerce platforms

Some enterprises are confused about how to account for livestream commissions and discount promotions. The compliant approach is to recognize revenue based on GMV, or gross merchandise value, while platform service fees are recorded as selling expenses, ensuring full revenue declaration.

Reminder: platform remittance is not equal to revenue. Even if only RMB 50 million is received after commissions are deducted, if GMV is RMB 100 million, revenue must still be recognized as RMB 100 million.

Scenario 3: Profit repatriation and local tax payment

Regardless of the structure adopted, the tax authority's core requirement is that the tax source remain local. Even if operations are conducted through a Hong Kong company, reasonable profits still need to flow back to the domestic entity through service fees, royalty fees, and similar means, with taxes paid according to law. Attempting to retain profits overseas for a long period will face anti-avoidance investigations.

IV. System support: integration of business and finance is the compliance guarantee

Manual bookkeeping can hardly cope with the complex scenarios of multiple platforms, multiple currencies, and multiple tax rates. Enterprises urgently need ERP systems to achieve:

Automatic distinction between domestic and export orders, with intelligent matching of tax rates and invoice types.

Real-time collection of customs declaration forms, foreign exchange receipt certificates, and logistics documents for export business.

Automatic generation of draft materials for tax refund declaration, ensuring consistency among the required documents.

Multi-dimensional cost accounting supporting profitability analysis by product line and market region.

As demonstrated by cross-border home furnishing enterprises using Soonfor ERP, integrating the full chain of procurement, production, sales, and finance can successfully achieve business-finance integration and provide a solid compliance foundation for dual-track operations.

In the era of transparent regulation, financial and tax compliance has been upgraded from a back-office function to a strategic asset. Doing a good job of financial and tax separation between cross-border business and domestic sales can not only avoid risks, but also enable enterprises to fully enjoy policy benefits such as export tax refunds, additional R&D deductions, and incentives for small and micro enterprises, making compliance a booster for growth.

All of this depends on the support of professional systems. Soonfor Software has been deeply engaged in manufacturing digitalization for more than 20 years. Its integrated ERP, CRM, and MES solutions have already helped many enterprises engaged in both cross-border business and domestic sales, such as Somai, Longwei Furniture, and Wabershi, achieve refined accounting, full-process compliance, and global operations. Choose Soonfor, and let your dual-track operations move forward steadily and far.