Tighter curbs may benefit local shops
CHINA’S tighter restrictions on overseas purchases may narrow the price differential of luxury goods between China and the rest of the world, encouraging consumers to spend more domestically and benefit local retailers, says Fitch Ratings in a latest report.
From last Friday, overseas retail goods bought online would no longer be treated as personal postal articles, which enjoy tax rate lower than that on other imported goods. Instead, those overseas purchases will be charged in the same way as any other imported goods, according to the new rules.
Fitch says domestic department store operators and luxury goods retailers are among the key beneficiaries of the restrictions. The measures may create a more level playing field for domestic retailers if enforcement is strict and not short-lived, it noted.
The Ministry of Commerce predicted the volume of cross-border e-commerce in 2016 will reach 6.5 trillion yuan (US$1 trillion) and will soon account for 20 percent of China’s foreign trade.
Personal postal articles are taxed at 10 percent, if they are worth under 1,000 yuan. Taxes under 50 yuan were waived.
Under the new rules, import VAT and consumption tax vary on goods, but combined they are almost certain to exceed 10 percent, though e-commerce buyers will get a discount of 30 percent off on their taxable amount.
The tariffs for all goods are set at zero, for now.
The new policy only allows a maximum of 2,000 yuan per single cross-border transaction and a maximum of 20,000 yuan per person per year.
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