In a bid to level the playing field for e-commerce platforms and traditional retailers and importers, the Chinese government will change the tax rules on online retail goods starting April 8, the Xinhua News Agency reported.
The Ministry of Finance announced on Thursday, March 24, that instead of being classified as "parcels" and be applied a "parcel tax" rate, which is lower than that on other imported goods, goods purchased online will be charged the same rate as other imported goods.
"Parcel tax is not for trade purposes, which is exactly what online retailing is. It is unfair to conventional importers and domestic producers," Zhang Bin of the Chinese Academy of Social Sciences said.
Imported goods worth less than 1,000 yuan ($150) are charged by government with a 10-percent parcel tax while it waives taxes for goods under 50 yuan.
The report, however, said that with the rising demand for overseas goods, parcel tax had been taken advantage of by online purchasing agents, who repack and mail products separately or use new methods to avoid tax.
The MOF said that with the new policy, a maximum of 2,000 yuan per single cross-border transaction and a maximum of 20,000 yuan per person per year are allowed. The ministry added that full taxes for general trade are levied on goods that exceed these limits.
A 2015 survey conducted by Amazon China on online imports showed that most buyers are under 35 years old and around 90 percent of them are college-educated. More than half of the buyers earn more than 5,000 yuan per month.
The report added that consumers will receive most orders from overseas within two weeks, instead of the current two months as the new policy has sped up customs clearance.
As cross-border e-commerce has been booming in China, the State Council announced in January that more cross-border e-commerce pilot zones will be established to attract businesses, create jobs and nurture new business models, which are expected to attract foreign trade and stimulate the economy.
Faced with a sluggish foreign trade, the country sees the expansion of the pilot zones timely.
According to the Ministry of Commerce, the volume of cross-border e-commerce in 2016 is estimated to reach 6.5 trillion yuan, which will soon account for 20 percent of the country's foreign trade.