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New Regime Could Bring The Curtains Down On China’s eCommerce Duty Free Epoch

  • Written By Andy
  • Posted April 11, 2016
  • 2 minutes Read Time

Last Friday (8th April) was the official launch of a new tax regime for cross-border eCommerce consumption in China that has now resulted in making it more expensive to purchase certain types of foreign goods.

These foreign goods are by and large regarded by domestic consumers as higher-quality than what is available locally.

The new tax guidelines, compiled by China’s tax administration, finance ministry and customs administration, now subject mainland internet shoppers to 70% of a range of taxes which, up till now, was only applicable to wholesalers.

At this early stage, it’s difficult to calculate even a guided range for taxation, due to the amount of regulation and the proportion clause, therefore it is fair to take up the opinion that more will be taken out of the wallets of China’s shopping habitual internet users, along with the exporters targeting them.

The crux of the matter for the policymakers is for them to attempt to provide a more level playing field for brick-and-mortar importers. However, with the meteoric rise at which the online sector has expanded over the previous few years, the new rules will have an impact on one of the primary channels many people in China opt to shop through.

At present the new system doesn’t totally remove the advantages of eCommerce for imports of less expensive goods, cost-wise – transactions that are less than Rmb2,000 (£217) and individuals whose collective purchases in a given year haven’t exceeded Rmb20,000 benefit from a 0% tariff rate.

Never the less, this hasn’t kept news outlets in China raising the profile of the so-called end of “duty-free era” for import shopping platforms.

Fortunately, this won’t affect Magento eCommerce development, and the growth of other eCommerce platforms, and while China’s market may not be as strong going forward as it has in previous years, the UK’s market remains thriving.