by Yating Xu, Economist, IHS Global Insight
Key points:
- China’s Ministry of Finance announced a new import tax policy on e-commerceon 24 March, which will take effect on 8 April 2016. This would mean a nearly 12% tax increase for cross-border ecommerce retailers.
- According to the official document, the tax-free price limit of inbound parcels will be lifted from CNY1,000 to CNY2,000. However, if aChinese citizen buysmore than CNY20,000 worth of goods within a year, or more than CNY2,000 in one purchase, the excess will be the subject of import tariffs that are applied to general trade.
- Moreover, the new policy is to levy 70% of import value-added tax (VAT) and consumption tax regardless of the price.
IHS Global Insight views:
China’s cross-border e-commerce exports and imports expanded 4.9 and 1.6 times, respectively, in 2015, compared to a 7% contraction in total foreign trade.
Currently, e-commerce retailers are applicable to a special parcel tax like individuals, which is much lower than the tax on general imported goods, presenting an obvious advantage compared to the traditional off-line imported goods sellers.
However, the new policy will increase cost for domestic e-commerce retailers and foreign exporters to China. Also, prices of related goods may increase accordingly.