China Customs: New rules and regulations

You may have read that with effect from last Friday (April 8th) with no grace period new regulations are being applied by Chinese Customs. While the regulations are (of course) complex, we have attempted to distil the key points to help aid understanding and spread the word.

Fundamentally, goods which utilise the “Cross-border e-commerce retail import” channel into China will have duty made up of tariff, VAT and consumption tax levied upon them. The consumer who purchases goods which are shipped into China using this channel will be liable to pay the tax. This applies to all goods for which there are ‘three elements’ in place namely the order details, payment information and logistics (i.e. tracking and consumer’s Chinese ID card) data.

The actual transaction price (including retail price, freight and insurance) will be considered the taxable value.

Here’s the detail:
1. The regulations apply to any cross-border e-commerce retail import merchandise bought through e-commerce trading platforms that are connected with China Customs. The ‘three-document connection’ is key: the criteria is that Chinese Customs is able to check the detail of the order (i.e. what it is), payment (how much it cost) and logistics (how and to whom it’s been sent). The intention is for this to be a national-level initiative including all marketplaces and encompassing all consumers in China.
2. Cross-border e-commerce retail import merchandise that is not transacted on e-commerce trading platforms connected with Customs, but which is imported by express delivery (i.e. courier services) and some tracked postal service channels that provide the “three document connection” information of order, payment and logistics and promise will also bear the same liability for tax to be paid by the consumer.
3. Personal articles that are not imported by the cross-border retail import channel but which do not include the complete order, payment and logistics information (per 1) will be treated in the same way as applies under existing regulations. In this case the sender will still self-certify the value and contents of the package but the payment information is not attached – this is broadly the same as occurs with current postal service and personal import channels.
4. The limit of each transaction conducted through cross-border e-commerce retail import is raised from RMB 1,000 to RMB 2,000 but an individual annual limit of RMB 20,000 is also being applied. The tariff rate for cross-border e-commerce retail import merchandise within these limits will be temporarily set at 0%. The VAT and consumption tax of import will be temporarily set at 70% without tax exemption. Items which exceed either the single transaction limit or take the consumer over their annual limit within the cross-border e-commerce retail import channel will have the full amount of general trade tax levied upon them.
5. Goods imported through the cross-border e-commerce retail import channel which are subsequently returned to the retailer within 30 days of customs release will qualify for a full tax rebate. The consumer will also see an adjustment of their total annual individual transaction amount to take the return into account.
6. The identity information of the buyer must be verified. When it is not verified, it should be consistent with the payer’s information.

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