Cosmetics Traded through CBEC Require Approval from CFDA

On April 14 2016, China Ministry of Finance released an announcement to explain the note “cosmetics imported for the first time excluded” in the China CBEC Commodities Positive List. The announcement states that in the future cosmetics sold through CBEC shall obtain administrative license or filing certificate based on the rule stipulated by the Regulations concerning the Hygiene Supervision over Cosmetics “cosmetics imported for the first time shall obtain the administrative license granted by the CFDA (filing for non-special use cosmetics)”. The actual meaning of CBEC “positive list” is finally clear. Categories excluded from the list are not permitted to be imported and cosmetics in the list are required to be registered or file a record with the CFDA prior to being imported to China via CBEC. In fact license requirement is not surprising. Last year, CIQs of certain CBEC pilot cities such as Ningbo and Shenzhen have required companies to submit

The actual meaning of CBEC “positive list” is finally clear. Categories excluded from the list are not permitted to be imported and cosmetics in the list are required to be registered or filed a record with the CFDA prior to being imported to China via CBEC.

In fact license requirement is not surprising. Last year, CIQs of certain CBEC pilot cities such as Ningbo and Shenzhen have required companies to submit CFDA’s approval when filing a record with CIQ online. But in some cities the requirement is not mandatory. With the release of the announcement, CBEC commodities will be subjected to the same tough importation and registration requirements as normal imported products. CBEC will be not a way to circumvent China's animal testing and Chinese labels any more.

New Tax System for CBEC Cosmetics

Products	Past		Since Apr 8 2016
Cosmetics except make-up cosmetics	Per order value < 50 RMB (after tax of 50%)	0	l Per order value ≤ 2000 RMB (after tax) l Annual purchasing value ≤ 20,000 RMB (after tax)	11.9%
	Per order value ≥50 RMB (after tax)	50%
Make-up cosmetics	Per order value < 50 RMB (after tax of 50%)	0	l Per order value ≤ 2000 RMB (after tax) l Annual purchasing value ≤ 20,000 RMB (after tax)	32.9%
	Per order value ≥50 RMB (after tax)	50%

Note 1: Cosmetics within the order limit are exempt from tariff.

Note 2: New tax rate (cosmetics within the order limit) = 70% * (17% of value-added tax + consumption tax).

Note 3: Consumption tax: 0% for cosmetics except make-up cosmetics; 30% for make-up cosmetics.

Note 4: Cosmetics beyond the order limit are subject to full tax (tariff+ value-added tax + consumption tax).