Retailers mull effect of China’s new online shopping tax

By RJ Whitehead

- Last updated on GMT

Related tags: Tax

Photo: iStock
Photo: iStock
China’s burgeoning e-commerce portals are not expecting international vendors increase their prices immediately for products such as food and baby products after a new government policy raised taxes on 1,100 imported items last weekend.

According to media reports, retails giants such as Alibaba said they believed that overseas brands and retailers active on their sites would absorb the higher prices before gradually passing these on to consumers.

Some of these companies have expressed concern at the lack of detail in the new regulations, especially regarding tougher requirements to determine which goods can be imported through cross-border e-commerce warehouses in pilot free-trade zones in 12 cities that were given preferential tax and customs treatment.

E-commerce is witnessing something of a boom in China, where an expanding middle-class that is increasingly unsatisfied with the quality of local products has become steadily more willing to pay higher prices for products from countries where food is deemed safer, such as Australia.

China’s finance ministry unveiled a new 11.9% value added tax last month which analysts said will increase the tax burden on low-end products while lowering the tax rate for some premium items such as cosmetics.

The move was taken by authorities in a bid to level the playing field between offline and online sellers, with the latter heretofore enjoying lower tax rates on imported goods.

Related topics: Business, Supply chain, East Asia, China

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