The U.S., German, and French tax bureaus are here! Shenzhen's cross-border sales have not paid

While most sellers are planning new layouts in 2022, Xinghui and its subsidiary Zebao Technology are reckoning with old accounts.

Recently, the listed company Xinghui Co., Ltd. and its subsidiary Zebao Technology filed a lawsuit against the former founder of Zebao and those acting in concert, revealing that Zebao’s overseas subsidiaries have accumulated unpaid and arrears of tax. Ten million yuan! The tax bureaus of various countries have come to the door...

Zebao was charged nearly 50 million in taxes

It is understood that Zebao has disclosed that it has 4 subsidiaries operating overseas, namely Sunvalley (HK) Limited, a company located in Hong Kong, Sunvalleytek International Inc. (STK) located in the United States, and ZBT International Trading Gmbh (ZBT) located in Germany. and Sunvalley JAPAN Co.Ltd (JND) in Japan.

In the draft of the merger and acquisition of Zebao Technology announced by Xinghui Co., Ltd., it was specifically mentioned that the four overseas subsidiaries of Zebao had to pay taxes according to the laws of various countries. Now it suddenly broke out that the tax authorities of the United States, Germany, and France have pursued taxes...

In the announcement of Xinghui's complaint against Zebao, the detailed data of Zebao's fines paid by tax bureaus of various countries are disclosed:

1. According to the Tax Closing Agreement (Closing Agreement Case No.2697660) signed on June 7, 2021 by STK America Corporation and the Washington State Department of Revenue

As of April 30, 2017, STK USA had unpaid retail tax, sales tax, additional penalties and interest totaling $703,015.21; the settlement amount was $550,000 and the exempt amount was $153,015.21.

2. According to the notice issued by US Customs and Border Protection to STK USA on July 3, 2019:

During the period from June 3, 2015 to December 4, 2015, due to the default of taxes by STK USA, the actual tax revenue loss of the U.S. government was USD 340,177.44, the potential tax revenue loss was USD 580,018.55, and a fine of USD 1,840,391.98 was payable.

On February 16, 2021, STK USA paid $340,177.44 in taxes. On September 8, 2021, U.S. Customs and Border Protection issued a second notice requiring STK USA to pay a penalty of $1,840,391.98.

3. The German tax authorities on March 17th and May 7th, 2021 issued a notice to pay the arrears of tax to ZBT:

From 2011 to 2015, ZBT Company owed business tax of EUR 196,384.80, business tax interest of EUR 65,065 and late payment fee of EUR 1,962.50. On May 14, 2021, ZBT Germany paid a total of EUR 198,347.30 in sales tax and late fees.

4. On November 30, 2020, the French Directorate General of Public Finance issued a tax payment notice, and the French tax department determined that:

From January 2015 to August 2019, Sunvalley (HK) Sunvalley Hong Kong had under-reported VAT, with a total of 4,950,891 euros in arrears and penalties. The amount was narrowed to 4,085,945 euros after Xinghui raised an objection.

based on the above tax-related matters, the Xinghui Co., Ltd. lawsuit requires the original founder of Zebao Technology and its concerted actors and other seven parties to the reorganization performance to pay RMB 49,195,568.54 and all the litigation costs of the case.

non-compliance
Zebao's 2021 revenue dros 46%
When Xinghui Co., Ltd. acquired Zebao, it was entirely because of Zebao's operating strength.

Founded in 2007, Zebao Technology is one of the most well-known sellers in the boutique model of Amazon's seller circle. In 2017, Zebao's revenue reached 1.743 billion yuan, of which more than 90% came from the Amazon platform, and less than 1,300 SKUs were sold that year.

As a traditional manufacturer of hardware products, in order to seek longer-term development, Xinghui Co., Ltd. acquired the cross-border e-commerce company Zebao Technology at a price of 1.53 billion yuan in 2018 through the issuance of shares and cash acquisition.

At the time of the acquisition, the two parties also signed a performance gambling agreement, requiring Zebao Technology to achieve a committed net profit of not less than 108 million yuan, 145 million yuan and 190 million yuan respectively in 2018-2020.

In the past three years, Zebao has exceeded the profit target with a net profit of 109 million, 154 million and 250 million respectively. It is one of the best sellers in Shenzhen that has signed a gambling agreement.

Today, Zebao has been charged with tens of millions of taxes, and it needs to be deducted from the profits of each year in the financial audit. If they operate legally and compliantly around the world, the actual growth rate of cross-border e-commerce companies' profits may not be as high as imagined.
However, to make matters worse, the 2021 annual performance forecast released by Xinghui shares shows that the annual net profit attributable to shareholders of listed companies is expected to be 1.24 billion to 1.42 billion yuan, a year-on-year change from profit to loss; net profit after deducting non-recurring gains and losses The loss was 1.29 billion to 1.47 billion yuan, which turned from profit to loss year-on-year.

Zebao expects that its revenue in 2021 will be only 2.6 billion yuan, a sharp drop of 46%, and its net profit will be -740 million yuan, a decrease of 1 billion yuan compared with 2020.

As for the reason for the loss, Xinghui shares said that due to the tide of Amazon's title, its performance in the second half of 2021 will suffer a huge impact. By the end of 2021, Zebao had a total of 367 Amazon stores closed, with a frozen fund of 32.2492 million yuan.



This matter once again sounded the alarm for the vast number of sellers and friends. Whether it is business or finance, whether it is domestic or foreign, it is necessary to operate in compliance with regulations. responsibilities and obligations.