On March 24, 2016, the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly issued the Notice on the Tax Policy for Cross-border E-commerce Retail Imports (Cai Guan Shui [2016] No. 18), also known as the “4.8 New Policy”, which stipulates that from April 8, 2016, for cross-border e-commerce retail imports, the tariff rate for imported goods within the limit will be temporarily set at 0; the exemption of import value-added tax and consumption tax will be cancelled, and 70% of the statutory tax payable will be temporarily levied; single transactions exceeding the single limit and the accumulated individual annual limit will be taxed in full according to the general trade method. Goods subject to this tax policy must comply with the “List of Cross-border E-commerce Retail Import Goods” and be able to achieve the comparison of the “three documents” of transaction, payment and logistics electronic information. On November 29, 2018, the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly issued the Notice on Improving the Tax Policy for Cross-border E-commerce Retail Imports (Cai Guan Shui [2018] No. 49), raising the single transaction limit from RMB 2,000 to RMB 5,000 and the annual transaction limit from RMB 20,000 to RMB 26,000.
(I) Tax Types
Before the “4.8 New Policy”, in terms of tax collection and management, cross-border e-commerce retail imported goods were taxed as personal items, namely, travel tax, so there was a 50 yuan tax-free quota. Travel tax is the abbreviation of luggage and mail import tax, which is the import tax levied by the customs on the luggage and personal mail of passengers entering the country. In essence, it is the product of the integration of tariffs, value-added tax and consumption tax. Travel tax is a simplified collection method in the tariff policy. The taxable objects of travel tax are luggage carried by inbound passengers, service personnel of transport vehicles, personal mail, gifts and other non-trade personal items entering the country in other ways. In order to encourage the development of the cross-border e-commerce industry, the customs has conducted a pilot program for cross-border e-commerce nationwide. The policy stipulates that the applicable situation of the travel tax is that there is order information when the goods enter the country and the consignee is an individual. At this stage, the applicable situations of the travel tax include online shopping bonded imports, direct purchase imports, and mail express channels.
After the “4.8 New Policy”, in terms of tax collection and management, cross-border e-commerce retail imported goods are subject to e-commerce tax, and the tariff rate for imported goods within the limit is temporarily set at 0%; the exemption of value-added tax and consumption tax at the import stage is cancelled, and it is temporarily levied at 70% of the statutory tax payable; single transactions that exceed the single limit and exceed the individual annual limit after accumulation are fully taxed in accordance with the general trade method.
(II) Taxable Objects
The cross-border e-commerce retail import tax policy applies to the following goods imported from other countries or regions and included in the “List of Cross-border E-commerce Retail Import Goods”: First, all cross-border e-commerce retail import goods that are traded through e-commerce trading platforms connected to the customs and can achieve the “three documents” comparison of transaction, payment, and logistics electronic information; Second, cross-border e-commerce retail import goods that are not traded through e-commerce trading platforms connected to the customs, but the inbound and outbound express operators and postal enterprises can provide electronic information such as transactions and payments and promise to bear the corresponding legal responsibilities.
Personal items that are not cross-border e-commerce retail imports and cross-border e-commerce retail import goods that cannot provide electronic information such as transactions, payments, and logistics shall be implemented in accordance with the current regulations, that is, the collection of travel tax or the full tax of general trade.