August 2017
Circular of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation on the Import Tariff Policy for Cross-border E-Commerce Retail(Mainland China)
James Cheng
On March 24, 2016, the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly promulgated the Circular on the Import Tariff Policy for Cross-border E-Commerce Retail (Cai Guan Shui [2016] No. 18; hereinafter, the "Circular"), which dramatically changes tax policy for the retail import of cross-border e-commerce businesses. The new tax policy has entered into effect on April 8, and cross-border e-commerce businesses now fall under the same import tariff policy as other importer businesses, which are assessed based on goods, and for the general taxation methods for import value-added taxes and consumption taxes. The new tax system stipulated by the Circular is summarized as follows:
(1) Tax rates based on trading value
The Circular sets a threshold on a single transaction of imported goods at RMB2, 000, and at RMB20, 000 for one individual over a year. No import tariffs will be levied for transactions below the above thresholds, and only 70% of the statutory payable amount of import value-added taxes and consumption taxes are collected. For transaction(s) that exceed either of the above thresholds, and a single indivisible good whose duty-paid value exceeds RMB2, 000, a full amount of taxes will be assessed as in ordinary trading.
(2) Tax collection and management via a "whitelist"
To establish an appropriate tax collection and management system, the Ministry of Finance will coordinate with the relevant agencies to jointly formulate a List of Cross-border E-Commerce Imported Retail Goods (hereinafter, the "List") for separate promulgation. The items found in the List for cross-border e-commerce businesses on the customs network, as well as any item on the List that has not yet appeared on the customs network but still possess uniform electronic information all fall within the scope of the new tax system.
On March 24, 2016, the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly promulgated the Circular on the Import Tariff Policy for Cross-border E-Commerce Retail (Cai Guan Shui [2016] No. 18; hereinafter, the "Circular"), which dramatically changes tax policy for the retail import of cross-border e-commerce businesses. The new tax policy has entered into effect on April 8, and cross-border e-commerce businesses now fall under the same import tariff policy as other importer businesses, which are assessed based on goods, and for the general taxation methods for import value-added taxes and consumption taxes. The new tax system stipulated by the Circular is summarized as follows:
(1) Tax rates based on trading value
The Circular sets a threshold on a single transaction of imported goods at RMB2, 000, and at RMB20, 000 for one individual over a year. No import tariffs will be levied for transactions below the above thresholds, and only 70% of the statutory payable amount of import value-added taxes and consumption taxes are collected. For transaction(s) that exceed either of the above thresholds, and a single indivisible good whose duty-paid value exceeds RMB2, 000, a full amount of taxes will be assessed as in ordinary trading.
(2) Tax collection and management via a "whitelist"
To establish an appropriate tax collection and management system, the Ministry of Finance will coordinate with the relevant agencies to jointly formulate a List of Cross-border E-Commerce Imported Retail Goods (hereinafter, the "List") for separate promulgation. The items found in the List for cross-border e-commerce businesses on the customs network, as well as any item on the List that has not yet appeared on the customs network but still possess uniform electronic information all fall within the scope of the new tax system.
