At the same time as the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly issued the new tax policy for cross-border e-commerce, the State Council Tariff Commission issued the “Notice on Adjusting the Import Tax on Inbound Articles”. Like the new tax policy for cross-border e-commerce, the new travel tax (i.e. “import tax on inbound articles”) will also be implemented from April 8, 2016.
The core of this notice lies in the annex, i.e. the adjusted “Import Tax Rate Table of Inbound Articles of the People’s Republic of China”
The new travel tax rate table has the following changes: ① The tax item structure has been optimized, from the previous four levels to three levels. Among the adjusted tax items, tax item 1 is mainly for goods with a zero most-favored-nation tax rate, tax item 3 is for high-end consumer goods subject to consumption tax, and other goods are classified into tax item 2. In other words, the adjusted tax items correspond to the tax items in general trade imports. ② The tax rate has been increased overall. Previously, it was 10%, 20%, 30%, and 50%, and now it is 15%, 30%, and 60%. Among them, golf balls and golf clubs, and high-end watches have the largest increase, which has doubled. The tax rate of certain products in the third volume is more favorable. After the adjustment, the specific scope of the goods listed in tax item 3 is consistent with the scope of consumption tax collection. In this way, the toiletries that were previously subject to 50% travel tax (tax item 4 in the original tax rate table) were adjusted to 30% (tax item 2 in the new tax rate table).
However, the 50 yuan tax threshold in the travel tax is still retained. In this case, for mass consumer goods in tax item 1, the previous duty-free price was within 500 yuan (inclusive), and now it is within 333 yuan (inclusive)2; for cosmetics that are subject to consumption tax, the previous duty-free price was within 100 yuan (inclusive), and now it is within 83 yuan (inclusive).
So, what impact will the adjustment of travel tax have on cross-border e-commerce?
Strictly speaking, there is no direct relationship between the two. We know that the original cross-border e-commerce adopted the standard of the travel tax rate, which was a temporary management measure of the state for the new cross-border e-commerce business. After April 8, 2016, cross-border e-commerce will be subject to the new tax rate. In this case, no matter how the travel tax is adjusted, it has nothing to do with cross-border e-commerce.
However, the two are indirectly related. There are three legal regular channels for a commodity to enter China from overseas: the travel channel, the cross-border e-commerce channel, and the general trade import channel. Among these three channels, the travel channel is very similar to the sunshine direct mail model of cross-border e-commerce: high frequency and small amount of fragmented packages. Although there is an essential difference between non-trade and trade, it is difficult to distinguish between the two in supervision, so some cross-border e-commerce merchants will use the travel channel to move goods. In the travel channel, if you declare according to the law (submit the shopping receipt, the front and back information of the ID card, and the logistics waybill), then there is no problem. However, many companies will underreport for the 50 yuan tax exemption. Some companies even conceal the name of the product for the convenience of customs clearance. It is these speculative behaviors that make the travel channel often called the “gray” channel.
It seems that in order to comply with the new tax policy for cross-border e-commerce, the postal and mail channels will inevitably be subject to strict inspections by the General Administration of Customs.