China's cross-border e-commerce bids farewell to 'tax-free' age

Overseas goods sold on Tmall, the online marketplace, being packed for shipment in China at the Hangzhou Cross-border Trade E-commerce Industrial Park on Tuesday. [Provided to China Daily]

BEIJING -- A change of China's tax policy on retails sales on cross-border e-commerce platforms has triggered mixed feelings among buyers and sellers as the policy is expected to raise retail prices.

According to the new rules, retail goods purchased online will no longer be treated as personal postal articles but as imported goods, which carry tariffs, import VAT and consumption tax.

Personal postal articles carry a tax of 10 percent, if they are worth less than 1,000 yuan ($154). And taxes under 50 yuan were waived.

Import VAT and consumption tax vary on goods, but combined they are almost certain to exceed 10 percent, though e-commerce consumers will enjoy a 30 percent discount on their taxable amount.

The tariffs for all goods are set at zero, for now.

Besides, the new policy only allows a maximum of 2,000 yuan per single cross-border transaction and a maximum of 20,000 yuan per person per year. Goods that exceed these limits will be levied the full tax for general trade.

The new policy shall apply to 1,142 commodities most often traded online, as published by the Ministry of Finance on Thursday.

During the past few years, China has witnessed a booming cross-border e-commerce sector, which registered more than 30 percent annual growth last year despite a sluggish foreign trade.

The new tax policy, aiming at leveling the playing field for e-commerce platforms and traditional retailers and importers, is bringing about anxiety as well as new hopes to both consumers and retailers.