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Tax Breaks for Online Sales in China

Multinational beauty companies to benefits.

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By: Tom Branna

Tax Breaks for Online Sales in China

Beauty companies are expected to benefit from China's recent tax rule changes regarding imported goods that are sold online. The government will remove a special tax, or so-called parcel tax, that was previously levied on imports sold online, according to South China Morning Post. Instead, it will charge value-added and consumption duties that are currently imposed on most products sold in China, but with a 30% discount.


The move is part of China attempts to boost its sagging economy. It comes after China expanded a pilot program in which a port district in the eastern city of Hangzhou was allowed to trade imported goods at lower taxes.
 

“Cosmetics will be the biggest beneficiary after the tax adjustment,“ said Catherine Tsang, a Hong Kong-based tax partner at PricewaterhouseCoopers.


Online sales of imported goods have grown at a compounded rate of 63% in the five years to 2015, reaching 638 billion yuan ($98 billion) and accounting for 17% of China’s total online retail sales, according to data from Mintel Group.

 

The most popular categories of products purchased online in China are consumer electronics, clothing and shoes, appliances, food and beverages, and beauty products, according to Euromonitor International.
 

As beauty and personal care was one of the most popular categories among imports bought by China’s internet shoppers any price cuts would further boost the market, Tsang said.

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