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China raises foreign e-commerce tax

  • Apr 3, 2016 | Richard Asquith

China raises foreign e-commerce tax

China has this week effectively raised the ‘Parcel Tax’ regime on consumer purchases of goods from foreign sellers on major e-commerce platforms.

Chinese Parcel Tax rises

The measure is designed to raise taxes on foreign website purchases by Chinese consumers, and provide a level playing field for China-based online and traditional high-street sellers. Aside from luxury consumer goods, the new measures will affect sales of baby food formula and nappies which form a growing proportion of foreign B2C online purchases.

Parcel Tax combines Chinese VAT, Customs Duties and Consumption Tax. The consolidate taxes are levied on the declared value of the goods, plus shipment costs and insurance costs.  NOTE: Consumption Tax, traditionally a luxury goods and tobacco tax, is levied on a range of consumer goods, and should be phased out in 2016 with the completion of the reforms to VAT.

From 8 April, China’s Parcel Tax will only fully apply to individual shipments of CNY 2,000 and above. Any single consumer may only import individual shipments totaling CNY 20,000 per annum without full Parcel Tax. Below these limits, Parcel Tax excludes Customs Duties, and incurs VAT and Consumption Tax on only 70% of the declared value of the shipments.

Customs Duties have also been increased a range of luxury goods, including watches and jewelry.

B2C Withholding Tax

The tax is levied, as a withholding tax, by the freight forwarder, who is responsible for importing the goods and delivering them to the Chinese consumer. In the case of returns or credits, consumers may claim a refund of the Parcel Tax within 30 days of the purchase.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara