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New tax policy regulates cross-border e-commerce

By Wu Yunhe | China Daily | Updated: 2016-03-31 08:36

I often receive short messages from Tmall.com's online retailers these days, which say "grasp the last chance to click for more cross-border purchases at the current price until April 8 when a new tax system on cross-border e-commerce sales will become effective".

The new taxation policy, announced by the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation last week, led to a heated debate in my office. Some of my colleagues said they hadn't made any cross-border purchases because many online retailers were neither honest nor offered good post-sales services.

Many customers have shared their poor experiences on the Internet on how they were cheated by cross-border retailers.

However, I don't believe retailers will cheat customers every time. How then could the country's cross-border e-commerce and overseas consumption have reached hundreds of billions of yuan a year?

I am quite unique in the eyes of some of my colleagues as I told them I had done cross-border shopping many times and seldom had an unpleasant experience. My experience is to make sure you are very familiar with the brands, prices and packaging of the products that you want to buy online, and don't forget to refer to other shoppers' comments.

In fact, I am among the hundreds of millions of Chinese consumers who often click for cross-border shopping.

I confess I will be quite annoyed if I have to pay much more for cross-border shopping on platforms as Tmall or JD because of the new taxation policy.

A major reason that makes me keep doing cross-border shopping is that it is economical to buy dietary supplements from online cross-border retailers. The online price of a bottle of Nature's Bounty Calcium softgels, which is branded and made in the United States, is 50 yuan ($7.6) to 100 yuan cheaper than that in bricks-and-mortar stores on average.

According to China's current taxation system on personal postal articles, goods with taxes under 50 yuan are exempt from customs duties.

China now levies personal postal articles tax on imported goods, which are under 1,000 yuan, and the tax rate is generally 10 percent. So, in this case if I did a cross-border purchase of Nature's Bounty's calcium and fish oil products at a total price of 499 yuan on Tmall, the tax would be only 49.9 yuan so that I can enjoy duty-free treatment, according to the current tax policy.

This is why the cross-border e-commerce is quite popular compared with offline imports, as the tax burden level is relatively low.

As more people demand overseas goods, many online purchasing agents have taken advantage of the personal postal article tax, ditched the old way of wholesaling and adopted new methods such as repackaging and mailing products separately to seek customs exemption.

Official statistics showed that in 2014, Chinese shoppers' purchases of imported goods online reached 476.3 billion yuan, however, the personal postal articles tax was under 1.3 billion yuan, which means a big loss of tax revenue to State coffers.

As Chinese customers' overseas shopping spree and the cross-border e-commerce craze are spread from cities to the countryside, despite a 7 percent decrease in China's foreign trade in 2015, the growth rate of the cross-border e-commerce increased more than 30 percent.

As a result, the implementation of the new tax system, which will come into effect on April 8, will offer cross-border businesses as well as traditional retailers a more fair competition mechanism.

Although the new policy means that I might have to pay extra taxes for my future cross-border shopping, it is indeed a good thing for the national economy.

At the same time, the policy will also help clean up the country's e-commerce of illegal activities, so that more consumers will believe that online purchases of overseas goods are safe, thus promoting the further sound development of the e-commerce industry.

Contact the writer at wuyunhe@chinadaily.com.cn

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