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China to Impose Tax on CBEC Traded Goods from 8 April 2016

On 24 Mar 2016, China Ministry of Finance together with General Administration of Customs and State Administration of Taxation jointly announced the pending levy of a new import tax on cross-border e-commerce (CBEC) commodities from 8 Apr 2016. The new tax is designed to level the playing field between traditional retail channels and foster fair market competition.  

On 24 Mar 2016, China Ministry of Finance together with General Administration of Customs and State Administration of Taxation jointly announced the pending levy of a new import tax on Cross-Border E-Commerce (CBEC) commodities from 8 Apr 2016. The new tax is designed to level the playing field between traditional retail channels and foster fair market competition.

Currently, CBEC commodities are mainly regarded as personal goods and only subject to personal postal article tax. Personal article tax is not a general tax for general imported goods but a combination of three taxes, namely tariff along with value-added tax and consumption tax. The tax rate is much lower than the normal import tax. Currently if the personal postal article tax is lower than 50 RMB, the tax is waived. The tax incentives extended to CBEC retailers has been a major reason for the growth witnessed in this sector.

The new tax regulation sets limits on the permitted total value of individual consumer transactions and also imposes limits on the aggregated annual purchasing total for all goods purchased via CBEC. In addition, it also specifies the new tax system for CBEC goods.

Two limits:

  1. The value of a single order should not exceed 2,000 RMB;

  2. The value of personal annual purchasing should not exceed 20,000 RMB.

Tax 1: tariff (within the limits)

Products within the restricted value are exempt from tariff.

Tax 2: value-added tax and consumption tax during importation (within the limits)

70% of the two taxes for general imported goods

Some categories such as foods and beverages do not have consumption tax so they will be subject to 70% of the value added tax.

CBEC commodities will be subject to full tax (tariff + value-added tax + consumption tax) under the following two conditions:

  • The part exceeding the above-mentioned two limits;

  • The value of single product (which means they cannot be further separated for individual resale) exceeds 2,000 RMB, such as luxury bags, watches, etc.

The government will publish a list of commodities for retail imported through CBEC in the near future. All these commodities should fall under the new tax scheme but those not imported through CBEC channel are still unregulated and subject to personal postal article tax only.

In the meantime, the announcement also adjusts the tax rate of personal postal article tax:

Current personal postal article tax rate and applicable commodities (to be replaced)
postal article tax rate applicable commodities
10% Food, beverages, books and periodicals, films, recording and videos, gold and silver products, computer, camera, etc.
20% Textile product, TV and vidicon, other electronic apparatus, bicycle, watch, clocks, etc.
30% Golf ball and other tools, luxury watches, etc.
50% Cigarette, wine, cosmetics
New personal postal article tax rate and applicable commodities
postal article tax rate applicable commodities
15% Goods enjoy zero MFN tariff rate
30% Others
60% Luxury consumptions levied on the consumption tax 

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