5 April 2016
New Cross-Border E-Commerce Retail Import Tax Policy to Take Effect on 8 April
The Ministry of Finance, General Administration of Customs and State Administration of Taxation jointly issued a new tax policy on cross-border e-commerce retail imports on 24 March. With effect from 8 April 2016, cross-border e-commerce retail goods will no longer be subject to personal postal articles tax but will be levied import tariffs, import value-added tax (VAT) and consumption tax on the goods to promote the healthy development of cross-border e-commerce.
China divides import and export commodities into goods and articles and taxes these differently. Import goods are subject to import tariffs, import VAT and consumption tax. For inbound luggage and postal articles not for trade purposes, tariffs, import VAT and consumption tax are combined into a collective tax called personal postal articles tax.
In China, reasonable quantities of imported retail goods for personal use are charged a personal postal articles tax, and a tax rate of 10% applies to most goods, which is lower than the tax levied on the same category of goods imported under the general trade system and domestic goods sold in the country. The present reform makes clear the trade purpose of cross-border e-commerce retail imports.
The new policy only allows a maximum value of Rmb2,000 for each transaction and a maximum of Rmb20,000 per person per year in cross-border e-commerce retail imports. Within this limit, tariff rate is temporarily set at 0%. Exemption of import VAT and consumption tax is abolished and a levy equivalent to 70% of the statutory payable amount is temporarily set. If a single transaction exceeds the maximum value for single transactions or the combined annual total for each person, and if the price of one inseparable article exceeds Rmb2,000, then it will be levied using the general trade tariff in full price.
Meanwhile, the Customs Tariff Commission of the State Council has adjusted the personal postal articles tax policy by changing the four rates of 10%, 20%, 30% and 50% into three, namely 15%, 30% and 60%. The 15% tax rate applies to MFN items with zero tariff, while the 60% tax rate applies to luxury goods. The rest are subject to the 30% tax rate.
Under the new tax policy, an individual who buys cross-border e-commerce retail goods is the taxpayer, the actual transaction price (including the retail price, freight and insurance) is the dutiable value, and the e-commerce enterprise, e-commerce platform or logistics enterprise is the withholding agent.
For details of the Circular on Tax Policies for Retail Import in Cross-Border E-Commerce (Cai Guan Shui No. 18 ) in Chinese, please see: