China Government Policy Evolution
The HaiTao market was not regulated in the early stage and had been operated in the gray area for several years.
Chinese government has launched several new regulations to bring order to this chaotic market.
New rules always bring different results for different players, and they are not always good news.
But we can believe all the policies are designed to support the market in the long term.
Trial Period Policy from Dec. 2012 to Mar. 2016
December 2012
China government has rolled out a pilot program and established pilot zones in Zhengzhou, Hangzhou, Shanghai, Ningbo, Chongqing.
September 2014
Guangzhou and Shenzhen Qianhai also joined the pilot program.
The setup of pilot zones for cross-border e-commerce business allows consumers to shop on foreign websites and have their orders shipped under the supervision of China Customs.
At the same time, qualified e-commerce companies are allowed to buy goods from abroad and store them in bonded warehouses in the pilot zones, and tariff payments are made after the goods are sold to consumers.
Online orders, payment receipts and customs declaration forms are electronically transmitted to the relevant local customs when consumers place online orders for imported items.
The customs then levies import duties on these orders at the rates applicable to personal items, i.e. Tariffs on baggage and articles accompanying incoming passengers and on personal postal articles. The tariffs are usually lower than the tax rates for general trade.
Announcement from the General Administration of Customs of China (GACC)
- Announcement No.56, 2014 on CrossBorder E-Commerce Trade Supervision*
Effective date: 1 August, 2014
E-commerce enterprises shall process an e-commerce business filing with Customs for imported goods. Further, enterprises or individuals engaged in cross-border e-commerce, payment and logistics shall submit orders, payments and logistics information to Customs before declaring goods to enter or exit China.
- Announcement No.57, 2014 Adds “1210” Customs Supervision Code**
Effective date: 1 August, 2014
Add the customs supervision code “1210” for “bonded crossborder trade e-commerce“ to accelerate the customs clearance process.
New Policy After Mar. 2016
March 24, 2016
Notice on Cross-border e-Commerce Retail Import Tax Policies
Jointly issued by China Ministry of Finance and the General Administration of Customs and the State Administration of Taxation
Cross-border e-commerce retail goods will no longer be charged by personal postal articles tax but imposed tariffs on goods and import value-added tax and consumption tax.
The new policy was planned to be effective from April 8 2016.
April 7, 2016
Cross-border e-Commerce Retail List of Imported Goods was published
Jointly published by eleven PRC government departments (covering all major government bodies relating to business trading, food and drug control, customs and tax)
April 15, 2016
Cross-border e-Commerce Retail List of Imported Goods Phase 2
The list was further updated and expanded by the same authorities.
May 24, 2016
The New Policy will be implemented on 2017
After the successful lobbying efforts by the eCommerce platforms, the effective date of the new policy will be put off to be effective on May.11, 2017.
The eCommerce Retail Import Tax
The new changes mainly include adjustments to tax rates, introduction of an annual limit of RMB 20,000 per individual consumer.
Before the New Policy
Before the new policy, a reasonable quantity of imported goods for personal use are charged a personal postal articles tax, which is a combined taxation of customs tariff, import VAT, and consumption tax and is still lower than regularly imported goods.
And, it can be exempted from tax if the tax payment is no more than 50 yuan.
New Policy
In the new policy, a single cross-border e-commerce personal transaction has a limit of 2,000 yuan and an annual limit of 20,000 yuan.
Within the limited value, tariff rate is temporarily set to 0%; import VAT and consumption tax have temporarily taxable amount of 70% levy. The 50 yuan tax payment exemption will no longer apply.
The personal postal articles tax policy is also adjusted from four tax categories of 10%, 20%, 30% and 50% to three categories of 15%, 30% and 60%.
Category 1 goods (15%) are items of major MFN with zero tariff; category 3 (60%) are for high-end and luxury goods; the rest falls into category 2.
Table of eCommerce Retail Import Tax
| Before | New Policy | |
| Transactions exempt from tax | ||
| Applicable tax exemption | Transaction amount less than RMB 50 | No tax exemption |
| Transactions that satisfy both limit on value of goods and annual limit which may benefit from reduced tax | ||
| Applicable limit for each translation | Transaction amount under RMB 1,000 can be treated as personal items. Postal tax is applied instead of regular customs duty | Transactions under RMB 2,000 will be subject to discounted rates, but such discounts will only apply temporarily (it is unclear how tax will be levied after the temporary period) |
| Applicable annual limit for an individual consumer | None | RMB 20,000 (The annual limit is calculated based on calendar year. Year 2016 is calculated from 8 April 2016 to 31 December 2016.) |
| Applicable tax | Postal tax, 10% for most food products | Customs duty: 0% (temporarily)VAT with a discounted rate: effectively 11.9% (temporarily) (i.e. 17% x 70% value of goods) Consumption tax with a discounted rate: 70% discount (temporarily) (but this does not apply to food products, except for tobacco and alcohol) |
| Tax on transactions exceeding above limits | ||
| Applicable tax | Will be treated as traditional trade, therefore subject to:
• customs duty • VAT • And consumption tax |
Will be treated as traditional trade, therefore subject to:
• customs duty • VAT • And consumption tax |