China’s State Council has ordered reductions in import taxes on foreign goods either brought into or mailed to the Chinese mainland by individuals from April 9.
According to Chinese customs regulations, import tax on individual imports is a unitary tax that includes tariffs, value-added tax (VAT) and consumption tax. The new policy will cut import taxes on infant formula, foods, beverages, cellphones and some medications from 15 percent to 13 percent, and that on clothing, bags and suitcases, cosmetics (excluding luxuries) and home appliances from 25 percent to 20 percent. No tax is payable if the total imports are valued below 5,000 yuan (US$725).
Zhou Jiayi, a deputy minister at China’s Ministry of Finance, said the tax cuts are in response to the previous VAT reductions on business imports. Just 10 days before, the Chinese government reduced VAT on business imports by one to three percent. This preferential policy, according to Chinese customs, will lead to around 225 billion yuan (US$32.6b) in tax reductions for business importers every year.
As the Chinese government reduced value-added tax on imported anti-cancer drugs by three percent in 2018, the new policy document notes that anti-cancer and rare disease drugs imported by individuals should have the lower tax rate applied.
As the value-added tax cuts will promote online cross-border shopping, the new policy on individual imports is expected to boost spending overseas by individuals. Zhou emphasized the measure is mainly targeting articles for daily use and does not cover luxury items.
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