China is on the cusp of implementing tax rules that would impact cross-border eCommerce, a move that observers say would have the impact of making more items — as wide-ranging as food and cosmetics — more expensive.
As reported by Caixin, the new tax will take effect beginning April 8, with surcharges being levied on goods that are imported and bought online and a 7 percent value-added tax pushed in addition to a consumption tax. The new tax structure was announced last week by the country’s finance ministry, the General Administration of Customs and the State Administration of Taxation.
This would be a marked change from the previous tax structure wherein buyers of such goods would incur and be liable only for a postal articles tax, which the publication said would amount to the most ubiquitous 10 percent to as much as 50 percent. The goods that are imported into the country are also compounded by value-added and consumption taxes. Under the new rules, packages with a value of 2,000 yuan and those individuals who receive goods via mail in excess of 20,000 yuan annually would be taxed at a higher rate.
In an interview with Caixan, Zhang Zhendong, chief executive officer of Bolo.me, a cross-border eRetailer, said: “For cross-border shopping firms that relied solely on differing tax rates under preferential policies for eCommerce, the times ahead will be tough because their business models will collapse if they don’t transform quickly.”
In another interview with Caixan, Niu Wenyi, a partner at a firm that allows Chinese consumers to shop for items that lie beyond their own borders, said: “Low-cost cosmetics, especially those imported from South Korea, each priced under 100 yuan,” would be hit harder.