China imposing new tax rules on cross-border e-commerce

BEIJING - In a move that experts say will increase the cost of many items such as food, health care products and low-price cosmetics, China is set to roll out new tax rules on cross-border e-commerce. From April 8, buyers of all imported goods purchased online must pay most of a 17% value-added tax and a consumption tax, if applicable, according to a policy released by the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation.

Caixin reports that, in the past, buyers would only pay a “postal articles tax” with rates ranging from the most common 10% to 50%. Goods imported in bulk through other channels are subject to a tariff as well as value-added and consumption taxes.

Caixin observed that this difference led to unfair competition among traders that the policy aims to address. The new rules will also eliminate a duty-free exemption for goods where tax payable does not exceed RMB 50.

CEO Zhang Zhendong, of cross-border e-retailer bolo.me, said: “For cross-border shipping firms that relied solely on differing tax rates under preferential policies for e-commerce, the times ahead will be tough because their business model will collapse if they don’t transform quickly.”  www.webershandwick.cn (ATI).