China to Adjust Import Tariff and Cosmetic Consumption Tax

The State Council of China recently announced that it will carry out a pilot project before the end of June to reduce the import tariff levied on some overseas consumer goods (the scope will be extended in the future). Another major change planned by China’s government proposes amendment to China’s consumption tax policy for mass consumer products, such as clothing, cosmetics, etc. It is also proposed that more duty-free shops can be set up and the spending threshold on onetime duty free purchases will be increased.

Zhao Ping, Vice Director of Consumer Economics Research at the Chinese Academy of Ministry of Commerce estimated that the project will be first implemented in four of China’s FTAs. The new tariff is expected to be 5%-10% on imported goods. 

Generally cosmetics exported to China are subject to 30% consumption tax and 17% VAT and import tariffs. The rate of import tariff depends on the country of origin. Nations with good trade relations have a tariff rate of just 5% while the tariffs for other countries may reach 20%-30%. Therefore, the total tax rate for imported cosmetics will be at least 52%. The new policies will undoubtedly be good news for both overseas companies and Chinese consumers.

Benefits for Cross-border Ecommerce

• The reduction of tariff will narrow the price gap between domestic goods and imported goods, motivating consumers to purchase imported goods through domestic channels.
• Chinese consumption habits will be influenced so that cross-border ecommerce platforms will automatically obtain more potential clients.
• The increasing number of duty-free shops will facilitate the combination of online transaction and offline stores, boosting the development of O2O economy.