Experts call for improved domestic product quality as China’s finance ministry eases worries that the new tax imposed on imported goods on Friday would affect overseas travelers.
In a statement released on Saturday cited by China Daily, the country's Ministry of Finance clarified that the new law imposing the additional tax would only affect products procured via e-commerce trading.
The ministry also explained that individual purchases are not covered by the tax implementation, provided that its value is not more than 5,000 yuan or $774, per a report from the Global Times.
According to the outlet, the Chinese finance ministry imposed the additional taxes in order to level the playing field among cross-border traders and local businessmen.
However, economic experts consider this to be an inadequate measure to truly achieve their goal, with some urging for better quality standards for domestic products.
New Tax Policy on E-commerce
On Friday, April 8, China implemented the new tax regime for cross-border e-commerce trading, stating that goods purchased online will no longer be considered as personal postal articles.
According to the Xinhua News Agency, this means that products purchased online will already carry import VAT, consumption tax and tariffs, something that would result in higher pricing.
According to China Daily, the move was made to "level playing field" for domestic and cross-border traders in response to the booming demand of products sold via e-commerce for their "higher-quality products."
"Now, retail goods sold on e-commerce sites are subject to the three taxes," the outlet explained. "Tariffs are currently all set at zero, with a 30-percent discount on import VAT and consumption tax for purchases up to 2,000 yuan, and only if a consumer's annual gross transactions are under 20,000 yuan."
Leveling the Playing Field
According to FT, the new tax policy, which was jointly announced by China's finance ministry, customs administration, and tax administration on March 24, will mean an increase in expenses on the part of e-commerce shoppers who previously enjoyed paying lower VAT and consumption tax as well as no tariff.
However, now that China has changed its policy on e-commerce trading, shoppers are complaining about the hefty additional tax they are required to pay to buy goods online.
According to China Daily, parcel tax for personal effects prior to the April 8 e-commerce tax policy change was at 10 percent.
Now, parcels bought from cross-border merchants were padded with tax ranging from 11.9 percent to as much as 32.9 percent.
While this is a good way of giving brick-and-mortar stores who retail imported goods an equal chance of earning, analysts believe that there should be more actions done to help even the local manufacturers have a fair chance at the game.
"The lack of premium domestic brands and the nations' concerns over food quality are the main reasons for domestic consumer preference for overseas shopping," China International Electronic Commerce Center's chief economic analyst Guo Shaofen told the Global Times.