China will change the tax rules on online retail goods from April 8 to level the playing field for e-commerce platforms and traditional retailers and importers.  

 中国将改变网上零售商品的税收规则,从4月8日起平衡电子商务平台、传统零售商和进口商之间的公平竞争。  

 Retail goods purchased online will no longer be classified as "parcels," which enjoy a "parcel tax" rate, lower than that on other imported goods.  

 网上购买零售商品将不再被列为“包裹”,享有比其它进口商品低的“包裹税”率。  

 Instead, online purchases from overseas will be charged in the same way as any other imported goods, the Ministry of Finance (MOF) announced on Thursday.

  相反,海外网购会和任何其他进口商品一样以同样的方式收税,财政部周四宣布。

  "Parcel tax is not for trade purposes, which is exactly what online retailing is. It is unfair to conventional importers and domestic producers," said Zhang Bin of the Chinese Academy of Social Sciences.   

“包裹税不是以商业为目的的,但网上零售却正是。这对传统进口商和国内生产商是不公平的”,中国社科院张斌说。   

China levies parcel tax on imported goods worth less than 1,000 Yuan ($150), and the rates is mostly 10 percept. Taxes under 50 Yuan are waived.   

中国对价值不到1000元进口货物增收包裹税,税率一般是10%。50元以下的税金放弃。  

 As demand for overseas goods grows, online purchasing agents have taken advantage of parcel tax and used new methods such as repackaging and mailing products separately to avoid tax.  

 随着对海外商品需求不断增长,在线采购代理也顺包裹税之势,用类似重新包装和分开邮寄等新方法来避免税收。   

The new policy only allows a maximum of 2,000 Yuan per single cross-border transaction and maximum of 20,000 Yuan per person per year. Goods that exceed these limits will be levied the full tax for general trade, the MOF said.  

 新的政策只允许每项单一跨境交易最高2000元,每人每年最高2万元。超过这些限制的商品将被征收一般贸易全额税,财政部说。  

 The new policy will speed up customs clearance so consumers will receive most orders from overseas within two weeks, instead of the current two months.  

 新政策将加快通关速度,让消费者两周内接收从国外来的大部分订单,而不是现在的两个月。   

Cross-border e-commerce has been booming in China. The country plans to set up cross-borderer e-commerce pilot zones to attract businesses, create jobs and nurture new business models that will boost foreign trade and stimulate the economy, the State Council announced in January.   

跨境电子商务在中国蓬勃发展。我国计划建立跨境电子商务试验区,吸引企业,创造就业机会和培育新的商业模式,这将提高对外贸易和刺激经济,国务院在1月份宣布。

  The Ministry of Commerce predicted the volume of cross-border e-commerce in 2016 will reach 6.5 trillion Yuan and will soon account for 20 percept of China’s foreign trade.  

 商务部预测跨境电子商务的数量在2016年将达到6.5万亿元,并将很快占中国对外贸易的20%。

 

Items Current Bonded B2B2C - Before April 8,2016 Bonded B2B2C  - effective April 8, 2016
TAX RULE Postal  Cross Border E-commerce(New)
Max Order Value CNY1000 if from overseas other than Hong Kong / Macao / Taiwan;
CNY800 if from Hong Kong / Macao / Taiwan
Order: CNY2000;
Annual CNY20,000 per one person (ID No.) 
Duty 1) Waive the duty if duty value less than CNY50;
2) 10%,20%,30%,50% vary by commodity in 4 levers;
3) Return or declared via general clearance channel if exceed max order value;
4) For single item that cannot be split and not over CNY5000, if proved to be personal usage, can be declare via postal channel.
1) No duty if under max order value;
2) If exceed max order value, to declare via general clearance channel - standard import duty/tax applied.
VAT/Comsumtion Tax Not applied VAT: 17% * 70% = 11.9%
Comsumtion Tax*70%:  Applied for some commodity only, like  Cosmetic: 30%*70%=21%.
Duty-paying Value Based on "Duty-paying value sheet" or provided transaction record for assessment reference. Selling rate + transport rate + insurance
Payer Product owner Consumer;
Merchant/platform/logistics provider can pay on behalf of consumer.
Product for Import Reference to  "negative list" released by China CIQ To define the commodity list for cross-border E-commerce

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Items Bonded B2B2C - Before April 8,2016 Postal -  effective April 8, 2016
TAX RULE Postal  Postal - New
Max Order Value CNY1000 if from overseas other than Hong Kong / Macao / Taiwan;
CNY800 if from Hong Kong / Macao / Taiwan
 
Duty 1) Waive the duty if duty value less than CNY50;
2) 10%,20%,30%,50% vary by commodity in 4 levers;
3) Return or declared via general clearance channel if exceed max order value;
4) For single item that cannot be split and not over CNY5000, if proved to be personal usage, can be declare via postal channel.
1) Waive the duty if duty value less than CNY50;
2) 15%, 30%, 60% vary by commodity in 3 levers;
3) Return or declared via general clearance channel if exceed max order value;
4) For single item that cannot be split and not over CNY5000, if proved to be personal usage, can be declare via postal channel.
VAT/Comsumtion Tax Not applied Not applied
Duty-paying Value Based on "Duty-paying value sheet" or provided transaction record for assessment reference. Based on "Duty-paying value sheet" or provided transaction record for assessment reference.
Payer Product owner Product owner
Product for Import Reference to  "negative list" released by China CIQ Reference to  "negative list" released by China CIQ

 

In some cases consumers will owe more tax, and in other cases less.

Lead Photo

 

Foreign online retailers and brands have benefited in recent years from China’s relaxed rules on purchases by Chinese consumers on overseas websites. China’s new rules on import duties and taxes will hurt some of those overseas online sellers, while helping others.

The new rules, to take effect in April, provide an exemption from import duties for purchases from foreign websites of up to 2,000 yuan ($306) but add a sales tax of 11.9% that consumers don’t pay today. That sales tax is still less than the 17% value-added tax consumers pay when shopping in stores in China.

The existing rules, which mirror the regulations for consumers bringing in purchases from abroad or receiving them by mail from friends overseas, allows a consumer to import up to 1,000 yuan ($153) worth of products at a time for personal use, up to 20,000 yuan in a year. Those purchases are subject to import duty—which generally vary from 10% to 50% of the purchase price, depending on the type of product—but the tax is waived if it’s under 50 yuan ($7.65.) That 50-yuan exemption will be eliminated in the new rules.

The new policy will benefit sellers of products for which the duty is high, such as cosmetics, which are hit with a 50% duty tax, says Li Pengbo, CEO of China Cross-border E-commerce Research Center, a consulting company. But other items for which the duty is low, such as children’s products, the new rules will make it more expensive for Chinese consumers to buy from overseas websites, Li says.

Here are some major product categories, with the duty tax percentage:

  • Food, 10%
  • Alcohol, 50%
  • Apparel, 20%
  • Cosmetics, 50%
  • Electronics, 20%

Thus, under existing rules a Chinese consumer who buys a shirt for $50 on a foreign e-commerce site pays a fee of $10 (20% duty on a $50 purchase), whereas under the new rules he would pay only $5.95 (no duty, but a sales tax of 11.9%.) However, a consumer buying $30 of powdered milk today would pay no duty or sales tax (the duty would be $3, 10% of $30, but that is waived because no fee is charged if the duty is below 50 yuan ($7.65)), whereas under the new rules she would pay $3.57 (no duty, but a sales tax of 11.9%.)

Both the new rules and the old ones also apply to foreign companies that sell on Chinese marketplaces under the relaxed cross-border e-commerce rules that China has adopted in recent years. Such major Chinese e-commerce operators as Alibaba Group Holding Ltd., JD.com Inc. and the Amazon China subsidiary of Amazon.com Inc. have created special sections of their online shopping sites featuring imported goods sold under the special cross-border rules. Those rules allow foreign companies to store items in 10 free-trade zones without clearing customs, and then send them through an expedited customs process when a Chinese shopper places an order.

They also allow the sale, up to the limit for personal use—1,000 yuan today and 2,000 yuan when the new rules take effect in April—of goods that have not been authorized for sale in China, as long as they have been found safe in their home country. That’s a big deal for sellers of products like cosmetics and food that can take years to gain approval from the Chinese government for domestic sale.

Chinese consumers have taken advantage of the cross-border e-commerce rules to buy significant quantities from foreign web merchants. China’s customs authority reported this month that the first seven of the free-trade zones established in China since late 2013 handled 100 million inbound parcels purchased from foreign e-retailers with a total value of $2 billion.

The relaxed rules on purchases from foreign websites have drawn protests from domestic retailers who say they have to pay import duties on all goods they bring into the country and charge consumers the national 17% value-added tax.

Gong Dingyu, founder and chief operating officer of Chinese children’s product retail chain Leyou, tells Internet Retailer, that the new rules represent of a different way to tax goods purchased from overseas e-retailers.

“The old policy is unfair because traditional trading companies and physical stores don’t have the same favorable policy as cross-border e-commerce,” Gong says. “Also, without products being monitored and inspected by the Chinese government, online consumers could buy imported products with quality issues.” 

JD.com is No. 1 in the Internet Retailer 2015 China 500 and Amazon China No. 5. While Alibaba's big online marketplaces Taobao and Tmall account for about three-quarters of online purchases in China, Alibaba is not ranked because it is a marketplace operator and not the merchant of record for any sales on its sites.