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Understanding Three Important Taxes Levied on Imported Cosmetics

Since April 8 2016, China implemented a new tax system for CBEC commodities. The new tax system was formulated based on the limits on the permitted total value of individual consumer transactions and the aggregated annual purchasing total for all goods purchased via CBEC respectively, which was set by China Ministry of Finance.

Two limits:

  • The value of a single order should not exceed 2,000 RMB;

  • The value of personal annual purchasing should not exceed 20,000 RMB.

Purchases with a value falling within the two limits specified above will be levied at the new tax rate, which is 70% of value-added tax and consumption tax (tariff is exempted). Otherwise, CBEC commodities are subject to full tax (tariff + value-added tax + consumption tax), which is also levied on products imported through standard channels.

 

Rate

Per order value ≤ 2000 RMB (after tax)

70% * (value-added tax + consumption tax)

Annual purchasing value ≤ 20,000 RMB (after tax)

Per order value > 2000 RMB (after tax)

Tariff + value-added tax + consumption tax

Annual purchasing value > 20,000 RMB (after tax)

Normal imported commodities

Tariff + value-added tax + consumption tax

How much is value-added tax, consumption tax and tariff of Cosmetics?

Value-added tax

In China, value-added tax includes 5 rates: 17%, 13%, 11%, 6% and 3%. Some products e.g. proprietary produce enjoy no value-added tax.

All imported cosmetics in China are subject to 17% of value-added tax.

Consumption tax

Consumption tax rate for cosmetics is 30% but the tax is only levied on the following categories:

  • Perfume

  • Powder

  • Lipstick

  • Nail polish

  • Blusher

  • Eyebrow pencil

  • Lip pencil

  • Eye shadow

  • Mascara

  • Cosmetics kits, including makeup tools such as small mirror, comb

Other cosmetics are exempted from the consumption tax.

Tariff

In China, tariff rates are divided into four categories:

1.       Most favored nation tariff rates: for WTO members

2.       Conventional tariff rates: for countries that signed an agreement (e.g. FTA) with China

3.       Preferential tariff rates: for countries that signed such an agreement with China

4.       General tariff rates

Below are general tariff rates and most favored nation tariff rates of cosmetics. For the other two kinds of rates, please refer to the specific agreements.

Cosmetics

Most favored nation tariff rates (%)

General tariff rates (%)

Perfume and floral water

10

150

Lip cosmetics

10

150

Eye cosmetics

10

150

Nail cosmetics

10

150

Powder including prickly heat powder and talcum powder

10

150

Skin care products (including sunscreen and suntan oil)

2

150

Other makeups/cosmetics

6.5

150

Shampoo

6.5

150

Hair perm

10

150

Hair styling

10

150

Other hair-care products

10

150

Toothpaste *

10

150

Note: Toothpaste is likely to be regulated as cosmetics in future. 

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