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China Introduces New Tax System for Cross-Border E-Commerce

March 30, 2016

The Ministry of Finance (MOF) of the People’s Republic of China, the State Administration of Taxation and the General Administration of Customs will introduce a new tax system for cross-border e-commerce from April 8, according to a notice published on the website of the MOF.

In the past, customers who bought products via cross-border e-commerce only had to pay the personal postal articles tax. This tax was levied at the same level as the personal postal articles tax on documents, luggage, and gifts. However, for imported goods, the imported goods tariff, import value-added tax (VAT), and consumption tax were imposed, which was higher than the personal postal articles tax on items purchased through cross-border e-commerce.

The MOF determined this mechanism as not fair for imported products. Therefore, the new tax system will not impose the personal postal articles tax on products bought through cross-border e-commerce, but will levy the imported goods tariff, import VAT, and consumption tax.

Considering the demands of Chinese customers, for single transfers that are lower than 2000 yuan in cross-border retail, the imported goods tariff will temporarily be set at zero percent. Each individual will be able enjoy the imported goods tariff exemption up to a maximum amount of 20,000 yuan spent in cross-border e-commerce per year.

Within the 2000 yuan cap, consumers will enjoy a 30 percent discount in the import VAT and the consumption tax. However, if a single transfer exceeds the 2000 yuan cap, or a person purchases more than 20,000 yuan of products via e-commerce per year, the tax rate will be the same as the tax rate for imported goods.

For example, if a person buys 300 yuan of fruit through cross-border e-commerce, the tax should be 27.3 yuan (300×13%×70%). However, if this person buys 3000 yuan of fruits through cross-border e-commerce at once, they will have to pay the imported goods tariff, the import VAT, and the consumption tax.

Global Times reported that “cross-border consumer e-commerce in China was about 259 billion yuan in 2015, accounting for more than 6 percent of China’s overall consumer e-commerce, and the segment is growing by more than 50 percent every year”.

China Daily commented that the tax rate would not have much influence on Chinese consumers, although the tax rate will be higher than before.

Image Source: Pixabay


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