Cross-border e-commerce import customs clearance model: from gray customs clearance to sunshine tax payment

Before the rise of cross-border e-commerce, mail, express mail and traditional trade constituted legal forms of customs clearance. However, with the surge in the volume of imported parcels, cross-border e-commerce imports have gradually become associated with “grey overseas shopping”. Against this background, almost every express shipment of goods and personal belongings is subject to customs inspection and will only be released after it is confirmed to be correct and in compliance with relevant regulations. Despite this, there are still cases of under-reporting the value of goods to evade taxes.

In contrast, the declaration and inspection process for mail is relatively simple, and customs usually conducts random inspections of personal postal items. Only when the standard of “self-use and reasonable quantity” is exceeded, formalities such as tax declaration and taxation are required. Due to limited customs resources, it is impossible to unpack and inspect all parcels one by one. Therefore, some overseas express parcels may not be taxed, resulting in the so-called “gray customs clearance” phenomenon. In addition, congestion in the normal customs clearance process also indirectly promotes the development of illegal channels.

Customs in various countries generally divide physical import and export into two categories: “goods” and “articles”. The former has trade attributes, while the latter is mainly for personal use. Based on this distinction, different types of items are included in their respective regulatory frameworks and institutional processes. When customs clearance of inbound goods, in principle, tax exemption or low tax rate policies will be implemented for personal items, while for trade items, reasonable taxes must be imposed on the premise of complying with international trade rules.

For goods, B2B is usually used for supervision, and a “one customs and three inspections” system is implemented – that is, the customs will collect tariffs, value-added tax and consumption tax based on specific goods, and require goods to pass commodity inspection, animal and plant quarantine and health quarantine. During this process, it is a basic requirement to ensure that the documents are complete and taxes and fees are paid. The biggest risk faced in customs supervision is that the goods do not match the information in the customs declaration form. This can be prevented by strengthening corporate credit management and increasing the frequency of spot checks.

As for items, they are mainly supervised through personal mail (including luggage and mail). The import of personal items must be reported truthfully, and the declaration obligations must be actively fulfilled in accordance with legal provisions and personal postal taxes must be paid. Although individuals enjoy tax-free treatment within a certain amount, if it exceeds the scope of “self-use and reasonable quantity”, it may be regarded as goods.

Cross-border e-commerce is different from trade in the traditional sense, nor is it completely equivalent to sending items by individuals. It is an import trade sales behavior led by e-commerce companies, aiming to meet consumers’ own needs rather than for resale purposes. However, the traditional personal logistics supervision model is obviously unable to cope with such a huge transaction scale. Announcement No. 56 issued by the General Administration of Customs in 2014 marked that cross-border e-commerce has officially entered the legalization track and begun to enjoy relevant tax incentives and convenient customs clearance services.

Currently, cross-border e-commerce mainly adopts two entry customs clearance modes: “direct purchase” and “bonded”, both of which are based on a high degree of electronics. Through seamless connection with e-commerce, payment, transportation and warehousing enterprise systems, customs can achieve multi-party collaboration and information sharing. With the help of the three-in-one information system of “customs declaration forms provided by e-commerce companies, payment lists provided by payment companies, and logistics waybills provided by logistics companies”, the list can be automatically synthesized and declared to the customs centrally. This new model of “one declaration, one inspection, one release” not only simplifies the process, but also makes the entire cross-border e-commerce chain information more transparent, helping to facilitate overseas shopping and comply with taxation of imported parts. Ultimately, this will also help the government use big data technology to improve management.