Temu Fully Managed vs Semi-Managed: Who Pays U.S. Tariffs and Taxes?

The dividing line between Temu's fully managed and semi-managed models, for U.S. tax, is where the goods change hands and to whom. Under fully managed, you hand goods to Temu in China and Temu handles export, import and the sale to U.S. buyers, so the supplier generally has no U.S. duty or income tax to deal with. Under semi-managed, the goods sit in a U.S. warehouse and you are the seller: the importer of record pays duties, and inventory states, Form 1099-K, effectively connected income and, for foreign-owned companies, Form 5472 are yours.

What Temu's own terms say

Temu's U.S. contracting entity is Whaleco Inc., a Delaware company. Its Terms of Use (last updated November 1, 2026) contain three points that matter to sellers. Products identified as local warehouse products are sold by third-party merchandise partners. Products not identified that way are sourced by Temu from third-party merchandise partners. Title and risk of loss pass from the seller to the buyer on delivery to the domestic carrier inside the United States. The terms also say buyers may act as importer of record for certain products, with Temu appointing a forwarder or customs broker to pay duties and taxes on the buyer's behalf.

Those points roughly draw the boundary: fully managed items are bought and sold by Temu, while local warehouse items under semi-managed and the local seller program are sold by you.

Fully managed: the supplier generally files nothing in the U.S.

Goods change hands in China, so the income is generally an export sale. A fully managed supplier delivers to Temu's designated warehouse in China, and Temu approves the price and handles cross-border shipping, customs and delivery. A supplier with no U.S. inventory, no U.S. staff and no delivery in the U.S. generally needs no U.S. company and has no U.S. income tax return to file. If the platform asks, a foreign company gives a W-8BEN-E to document its non-U.S. status.

But read three clauses in the contract. First, whether you sell to Temu or consign goods for Temu to sell. Second, where title and risk pass. Third, who is the U.S. importer of record. If title passes only when goods reach the U.S. buyer, or you are asked to ship in bulk to a U.S. warehouse as importer, the fully managed logic no longer holds and you need to analyze it as a U.S. seller. Reports say Temu opened U.S. forward warehouses in 2025 and moved some fully managed stock there; who is importer in that case follows your notice and the entry documents.

Chinese taxes still apply. VAT, export rebates and enterprise income tax in China follow Chinese rules.

Semi-managed: you are the U.S. importer and seller

The importer of record pays the duty. The $800 de minimis exemption ended for goods from mainland China and Hong Kong on May 2, 2025, was suspended for all countries from August 29, 2025, remained suspended after the Supreme Court's February 2026 tariff ruling, and loses its statutory basis on July 1, 2027 under OBBBA. When you stock a U.S. warehouse, every shipment is entered and dutiable. If your U.S. company is importer, it registers with CBP and formal entries generally need a customs bond. If a forwarder is importer under DDP terms, the duties, entry liability and any refund claim are in the forwarder's name.

Duties go into inventory cost. Purchase price, inbound freight, duties, brokerage and delivery to the warehouse are capitalized into inventory and deducted as cost of goods sold when items sell, not all in the year you pay the duty. When you buy from a related Chinese factory, the tax cost of inventory generally can't exceed the customs value (Section 1059A), and the purchase price must be arm's length (Section 482).

Inventory states. Inventory in a state's warehouse gives you physical presence there, which can mean sales tax registration, state income tax or franchise tax. Temu collects sales tax from buyers at checkout, but state income and franchise taxes are not the platform's job.

Form 1099-K. A U.S. seller paid more than $20,000 in more than 200 transactions in a year gets a 1099-K. It reports gross amounts and needs to be reconciled to the settlement reports.

Effectively connected income for foreign owners. Because Temu's terms pass title inside the U.S., a foreign person selling through a U.S. warehouse is generally earning U.S.-source business income, and it is quite likely to be effectively connected income. A single-member LLC owned by one foreign person files pro forma Form 1120 with Form 5472 every year, and the owner may also have to file Form 1040-NR. A U.S. corporation 25% or more foreign-owned attaches Form 5472 to its Form 1120. Each missed Form 5472 starts at a $25,000 penalty.

A side-by-side example

Example (hypothetical numbers, to show the method): under fully managed, Temu approves a supply price of $5 a unit for a product. The supplier delivers in China, has no U.S. duty and no U.S. filing, and its profit is computed under Chinese cost and tax rules.

Switching to semi-managed, a C corporation the supplier sets up in the U.S. buys the goods: purchase price $4 a unit, duty at an assumed 37.5% rate of $1.50, inbound freight $0.60, U.S. warehousing and last-mile shipping $3.00, for a unit cost of $9.10. Temu settles $13.00 a unit to the seller, leaving $3.90 of pre-tax profit per unit. On 10,000 units that is $39,000 of pre-tax profit and $8,190 of federal corporate tax at 21%. If the warehouse is in California and California's doing-business thresholds are met, add the $800 minimum franchise tax. Semi-managed gives more pricing control and more profit per unit, but the duties, inventory, state taxes and annual filings are all yours.

How to choose

If you only want to supply goods and stay out of U.S. tax, fully managed is simplest; just read the contract carefully. If you want pricing control and are willing to run a U.S. warehouse, settle the U.S. entity and the importer of record before you ship. A foreign owner using a single-member LLC should decide first whether the platform gets a W-8 or a W-9 and whether to elect corporate treatment.

Learn more

The three models side by side, an entity-choice table, a platform comparison and a pre-onboarding checklist are in our Temu seller guide; putting duties into inventory cost is covered in our Amazon FBA tax guide. If you're not sure which model fits, book a free 15-minute call or message us on WeChat at YCLUSA.