New e-commerce tax to have impact on prices
March 29, 2016 Category Retail, Weekly
New e-commerce tax policies may lead to cheaper imported cosmetics but higher costs of food and baby products for Chinese consumers. Under the new tax policy, the government will remove the parcel tax, the only tax currently levied on imported items sold online. Instead, it will levy an import value-added tax (VAT) and consumption duties but with a 30% discount, as long as a purchase doesn’t exceed CNY2,000 and the annual gross transactions by an individual consumer are below CNY20,000. For deals above the cap, consumers will get no tax discounts and will also need to pay customs tariffs. The new policy, which will take effect on April 8, comes a year after the government implemented the parcel tax to promote cross-border e-commerce in China. The parcel tax rate for lower-end products such as food and infant items is 10%, according to Wang Wei, Director of the Institute for Market Economy of the State Council Development Research Center. “Such low tax rates are in fact giving cross-border e-commerce sites an unfair advantage over offline retailers,” she said. E-commerce site Alibaba Group said that lower-end products such as food and baby products will be subject to heavier taxes after the tax adjustment. The price of cosmetics on the other hand may become cheaper if a single deal exceeds CNY100. Last year, online sales of imported goods reached CNY638 billion and accounted for 17% of China’s total online retail sales, according Mintel Group, a London-based market research company. The most popular categories of products purchased online in China are food, beauty products, consumer electronics, clothing and shoes, the China Daily reports.
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