New cross-border e-commerce tax in China

China will implement a new tax system for cross-border e-commerce retail sales, the Economic daily has reported.

The implementation, which will come into effect on April 8, will offer cross-border business as well as traditional retailers a more fair competition mechanism.

As Chinese customers' overseas shopping spree and cross-border e-commerce craze continues to expand despite of a 7 per cent fall in China's import and export data, the growth rate of cross-border e-commerce went up to 30 per cent.

The much-debated personal postal articles tax is levied on cross-border e-commerce retailers. According to Wang Wei, director of Institute of Market Economy of Development Research Center of the State Council, in the early stage of cross-border e-commerce development, China levies personal postal articles tax on retailers, which is a collective tax including imported goods tariff , import value-added tax and consumption tax.

China levies personal postal articles tax on imported goods which are under 1,000 yuan, and the tax rate are mostly 10 per cent. Goods with taxes under 50 yuan are exempt from Customs tax, said Wang.

It is an important reason why cross-border e-commerce is quite popular since compared to traditional import trade, the tax burden level is relatively low, according to Wang.

Statistics showed that in 2014, cross-border e-commerce and overseas consumptions reached hundreds of billions of yuan. But the personal postal articles tax was under 1.3 billion yuan, which shows a big loss of tax revenue.

The new policy only allows a maximum of 2,000 yuan of single transfer in cross-border retail and a maximum of 20,000 yuan per person per year.