Rules and Regulations for Cross-border E-Commerce in China – Ashley Talks 69

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This post is all about the latest rules and regulations for cross-border e-commerce in China. In today’s #AshleyTalks you’ll learn about three key highlights of the regulations introduced in 2016: taxation, the positive list and import models. I also give some advice on cross-border selling without registering a legal entity in China.
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A lack of consistency in regulations is one of the biggest challenges for companies engaging in CBEC. In 2016, two new rules –  “Tax Policy for Cross-Border E-Commerce Retail Imports” and “List of Imported Commodities for Retail in Cross-Border E-Commerce” – were introduced. After protests by Chinese e-commerce companies about the new rules and out of fear of tanking the Chinese e-commerce market, the central government decided on a one-year transitional phase which ends in 2017.

Taxation Rules

Products are taxed differently depending on their categories. The value of a single transaction cannot exceed 2,000 RMB and is limited to 20,000 RMB per person per year. Above this value, general trade rules apply. In addition, the 50 RMB tax exemption policy has been abolished and single items exceeding the 2,000 RMB limit are handled according to general trade tariffs, without ‘personal use’ exceptions.

The Positive List

The positive list, published in two batches, involves a total of 1,293 commodity categories, categorized by 8-digit harmonized system codes. The goods included in the positive list are exempted from submitting an import license to customs. However, products under CFDA (China Food and Drug Administration) rules require registration prior to importation.

Import Models

Bonded Imports and Direct Purchase Imports are the two major models.

#1 Bonded imports (bonded warehouse model (B2B2C)/ direct mailing (B2C) model)

Bonded warehouse model (B2B2C): ‘stock first, order later’. Products on the positive list can be imported in bulk into approved CBEC bonded warehouse zones across China. These products go through customs clearance directly in the bonded area and are then delivered to the customers who placed the order.

Direct mailing (B2C) model: ‘Order first, deliver later’. AFTER customers place orders on a registered cross-border e-commerce platform, the platform needs to submit the records of the order, shipment and payment to customs. At the same time, the products will be shipped from an overseas distribution centre that is linked to Chinese customs. Only when these three records of a single purchase are in accordance can the parcel be released.

#2 Direct Purchase Imports (B2C)

Products which are not on the CBEC positive list can also be shipped directly from overseas merchants (B2C) and individuals (C2C) to China via the postal and courier system.  Unlike bonded imports, Chinese customs will treat the imported product as a product for personal use, thus taxed by personal tax: 15%, 30% or 60% depending on the category.

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Much of the content for this video was sourced from the recent China CBEC Guidebook by the Consulate-General of the Kingdom of the Netherlands in Shanghai. The full report can be found here