Australia Officially Levy 10% GST on CBEC Cosmetics since July 1

Takehome:

• Australia has extended the scope of 10% GST (the Good and Service Tax) to low-value CBEC cosmetics.

• Imported cosmetic stakeholders whose annual sales volumes over A$75,000 in Australia are required to register in ATO, lodge tax returns and pay GST.

According to a recent notice from Australia Taxation Office (ATO), the scope of GST which previously applied to digital products and import services has been formally extended to imports of physical products (excluding tobacco products or alcoholic beverages) valued at A$1000 or less since July 1 in accordance with the provisions of the adopted Treasury Laws Amendment (GST Low Value Goods) Act 2017.

To be specific, the following two points are stressed in the Act:

• Low-value products (previously GST-free) purchased by consumers and brought into Australia with the assistance of suppliers after July 1 are subject to 10% GST.

• All overseas enterprises or online e-commerce platforms with annual turnover reaching or over A$75,000 are considered as suppliers of low-value products and are required to register in ATO and pay 10% GST quarterly.

Interpretations

1. The reform signals Australia government’s stricter supervision towards CBEC taxation.

2. Australian Customs takes the administrative responsibility of GST on imported goods over A$1000. Instead the ATO is in charge of GST on low-value imports.

3. Australia consumers instead of overseas vendors are liable for the 10% GST which are collected by the online platforms such as eBay and remitted to ATO.

4. The extra 10% GST applies when the following three conditions are met: (1) the location of goods is outside Australia; (2) the consignee address is in Australia; (3) the order price arrives at A$1000 or less (freight included).

Advice for Cosmetic Stakeholders

Considering low-value items make up the majority of cosmetic cross-border transactions the reform of GST will affect most purchases of CBEC cosmetics. Stakeholders shall pay attention to the following compliance requirements:

1. Provide accurate locations of CBEC goods, make sure the shipping address showing in the logistics is consistent with the location, and avoid misleading descriptions of city and country information. For example: Beijing, China (√); Beijing, the United State (×); Location: the United Kingdom, Actual shipping address: China (×).

2. Register in the ATO once your turnover meets the A$75000 threshold within 12 months.

3. Cosmetic stakeholders violating the above requirements are subject to varying punitive measures such as restrictions on sales, an additional 75% or higher administrative penalty, tax investigation according to the circumstances.

4. For more information of the reform, please consult the official website of ATO.