G FU N AI M Prepared by Mai Fung This is a summary of changes on China’s cross-border e-commerce (CBEC) policy recently entering into force, which mainly includes taxation adjustment and details on overseas products allowed to be operated under CBEC model.
Special thanks to: 鷹熊匯 （KJDS - www.ikjds.com）and Chemlinked.com
UPDATE
HOW CHINA CBEC DEVELOPS THEN?
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Products imported through CBEC model and stored at bonded warehouses before Apr. 08 will be allowed to sell without any extra documentation required under new policy according Customs new regulation.
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At stock
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If your products stocked at bonded or shipped to China before
On the way
If products imported through CBEC model and shipped to China will be allowed to store at bonded warehouses by proving the contract date and shipping date before Apr.08;and also allowed to sell without any extra documentation required under new policy according Customs new regulation.
Complied with new Policy: 1) Positive List 2) Certificate and Customs Clearance documentation or being returned at ports
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CBEC Policy Changed
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Regarding the new CBEC policy, which ways of Customs Clearance will be largely affected?
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Then you firstly need to know the differences between ways of commodities getting into China (the types of Customs clearance). Please pay more attention to the comparison between Direct Purchase of CBEC (9610), Post Mail and Express Delivery.
The Ways Commodities Get into China Personal activities (C2C)
Custom Policy
Custom Policy
Bonded warehouse of CBEC
1. Chinese consumers make order through eplatform; data transferred to authority 2. Products directly delivered by package from foreign countries
1. Chinese consumers make order through eplatform; data transferred to authority 2. Products pre-stocked at bonded warehouse; then packaged and delivered after order received
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Direct purchase of CBEC
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B2C or B2B2C activities
1. Chinese make orders on overseas platforms or through other channels, personal packages will be sent by post mail.
2. Post mail service provider will be under inspection of the authority.
Affected by new CBEC taxation and positive list Higher effective for Custom clearance (24/7)
• Above comparison not includes Customs clearance through Conventional Trade; • Special thanks to Zjkjds (浙江跨境电子商务)
1. Chinese make orders on overseas platforms or through other channels, personal packages will be sent by express service. 2. Express service provider will be under inspection of the authority.
1. Products will be carried into China by travelers in person. 2. The carrier will be under inspection of the authority.
NOT affected by new CBEC taxation and positive list, but new postal tax rule A bit lower effective for Custom clearance (according to the Custom daily routine)
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New CBEC Taxation
B2B or B2B2C
Bonded Warehouse Import model of CBEC
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Overseas goods will be firstly pre-stored at the bonded warehouse located at accredited CBEC pilot zones and then going through packaging, Custom clearance, national express service to the end customers.
Remember 9610 and 1210? Regarding 1210, Customs Clearance Document is a must for Customs clearance. This is not being required for 9610.
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70%
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0 *
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< 2,000RMB
Limits for per person’s single purchase through CBEC
5% 30%
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New CBEC Taxation after Apr. 08
< 20,000RMB
OR
Limits for per person’s annual purchase through CBEC, calculation started since Apr 08 2016
Applicable • Flavor for F&B production • Make-up • Club & Golf
Inapplicable • • • •
F&B part of health foods Diaper, Infant Formula Cloths, Appliances Skin-care products
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CBEC VAT = 11.9% (Regular VAT = 17%)
70% How Can a Chinese consumer benefit from 70% of Tax on Consumption and VAT during CBEC online shopping?
Most of categories imported through CBEC are not imposed with Consumption Tax.
Make Some Examples
After Apr. 8, however, each can of IF (with registration certificate) will be taxed with 70% of regular VAT, which is 11.9%.
Increased by 11.9% * Diaper follows the same calculation rule.
11.9%
Postal Tax Rate before Apr.08
New CBEC Tax after Apr. 08
50% 32.9%
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<100RMB
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Before Apr.8, consumers shopped on can of IF will pay 10% postal tax. But in normal cases, the price would not reach the threshold of postal taxation (50RMB). Consumers paid no postal tax at all.
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New CBEC Tax after Apr. 08
10%
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Postal Tax Rate before Apr.08
Before Apr.8, consumers shopped one make-up product paid 50% postal tax. But in normal cases, the price would not reach the threshold of postal taxation(50RMB). Consumers paid no postal tax at all.
Before Apr.8, consumers shopped one make-up product paid 50% postal tax.
After Apr. 8, however, each make-up (with registration certificate) will be taxed with 70% of regular VAT(17%) and Consumption Tax(30%) , which make 32.9% in total.
After Apr. 8, however, make-up (with registration certificate) will be taxed with 70% of regular VAT(17%) and Consumption Tax(30%) , which make 32.9% in total.
Increased by 32.9%
>100RMB
Decreased by 17.1%
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Revised Postal Taxation
Post Mail, Express Delivery
Overseas goods purchased and treated as personal mail will be packaged abroad and delivered through international mail or express services directly to end Chinese consumers. To some aspect, it is more like C2C model.
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International Mail Delivery Service
Postal Taxation before & after Apr. 08
Golf, Luxury watch etc.
30%
Cosmetic(make-up), Skin-care product Cigarette, Wine etc.
50%
Postal Tax before Apr. 8 was applied to all imported products through CBEC. Postal Tax threshold was 50RMB before Apr. 8.
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20%
Skin-care Products, Cloths, Bicycle, Video camera, Sports, TV etc.
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Cloths, Appliances etc.
Food & Beverage, Toy, PC, Camera etc.
Apr. 08
10%
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Food & Beverage
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Postal Tax
Cosmetic(make-up, perfume), Luxury watch etc.
Revised Postal Tax 15%
> More revised 30%
information on postal taxation of cosmetic products
60%
Revised Postal Tax after Apr. 8 is only applicable to products delivered through international mail or express services. Regarding B2C or B2B2C (bonded warehouse model), it is inapplicable. Postal Tax threshold is still 50RMB
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Postal Taxation for Cosmetic Products
Nail polish
Lip gloss | Lip contour
Blusher | Foundation
Mascara | Eyebrow pencil
Wrinkle prevention products
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Make Up
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Perfume | Toilet water
Wash & Skin-care
Face cleansing cream| Tooth paste | Shaving cream Sun screen | Toner | Mosquito repellent | Lotion Shampoo | Hair spray | Hair dye
Deodorant | Body Shaping Cream
• Special thanks to Ougao (上海欧高国际货运)
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Positive List & Allowed Categories
It impacts business
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The overseas commodities listed in this documentation published on Apr. 07 will be allowed to operate and retail through CBEC model.
Guess: 2 batches of positive list have been released till Apr 15. Would there be more of it?
2nd batch of Positive List
151 more products added on Apr. 15
Tariff NO. 158, infant formula is on the list and IF will be required with CFDA registration certificate along with importation as early as Jan 01 2018.
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Liquid milk (including UHT milk, pasteurized milk and formulated milk), and milk powder (low and full fat) for adults were added back to the positive list but with one more remark said “only for bonded warehouse model of CBEC”.
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Various make-up and skin care products are on the list. However each of them is going with “the cosmetic product imported for the first time is excluded”. So cosmetic products retailed imported for being retailed through CBEC model for the first time through must be registered or filed (cosmetic for non-special uses) with CFDA prior to being introduced into China.
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Categories You Highly Interested in
Health foods are now on the list, however with stricter CFDA registration and filing requirements. The new registration and filing regulation of CFDA will enter into force since July this year.
On the list, registration certificate will be required since Jan 01 2018 Wine and pet’s food are on the list. Beer is not on the list however. Spirit like sparkling water with sugar or flavor not on the list.
Fresh foods including some seafood, meat and fruit as well vegetables are on the list now. However, some responsible people of leading e-commerce companies believe conventional trade might be more fitting for the fresh food business.
Requirements on Infant Formula
According to the new CBEC policy, infant formula are on the positive list for operation through CBEC model. But it should meet the following requirement:
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It means if your infant formula would be retailed through CBEC model, registration with CFDA is a must before any market activities.
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Infant formula not being registered with CFDA in accordance with New Food Safety Law is excluded.
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Updated on Apr 13 The Management Measures on Registration of Infant Formula is still not finalized, which means there is no specific guidance for you to follow when you prepare registration for overseas IF.
Infant Formula imported through CBEC model are not subject to registration for now. Jan
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2018
Infant Formula imported through CBEC model and conventional trade will both have to be presented with formula registration of CFDA since Jan 01 2018.
YES CNCA registration is a must
NO Requirements with Conventional Food & Beverage Dairy Products
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for diary manufacturers; IF required with CFDA reg. since Jan 01 2018, thinking early start. CIQ puts stricter enforcement on CBEC the same as traditional trade.
Baby Food
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YES CFDA filing will be required
Skin Care Products
with a duration of 6-8 months; Baby skin care additionally required with safety assessment.
YES CFDA filing will be required ;
the starting line of filing might be July this year. To be confirmed till the end of Apr. 2016. But demand of health food is not as much as IF, transitional period might not be allowed with.
CFDA; CIQ might check meat ingredient in food if need be
NO Requirements with
CFDA; CIQ might check meat ingredient in food if need be
Fresh meat and seafood
NO Requirements with
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for diary manufacturers; CIQ might check meat if need be
NO Requirements with
Pet Food
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YES CNCA registration is a must
CFDA for prepackaged food; compliant labels not required now
Fruit & Vegetables
CFDA; CIQ might check if need be
Health Food (Vitamin…)
• Above categories are all on the list. But specific products should be referred to the positive list and confirmed with local authority. • Special thanks to Zjkjds (浙江跨境电子商务)
Listed Goods Meet Stricter Enforcement
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Here please refer to 9610 and 1210, Custom policy.
Overseas commodities through bonded warehouse model will be asked for the similar requirements as conventional trade by AQSIQ for successful Custom clearance when they reach bonded warehouse. The detailed requirements have not yet come out. According to the experience, there will always be gray zone left for local authority (CIQ) to make adjustment against specific cases as universal enforcement standards always come up late in China.
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The advantage of bondedwarehouse model of CBEC compared with conventional trade is further narrowed down.
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For the first-time imported cosmetics, infant formula and health food, those categories will be subject to stricter CFDA registration which causes great workload to supplier if they don’t want to lose battlefield here in China,
Download the Positive List I– 23P (Chinese only)
Download the Positive List II– 5P (Chinese only)
Post Mail and Express delivery will not be affected by the positive list, which gives it advantage compared with bonded-warehouse model.
Milk powder except Infant formula not on Positive List
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New CBEC Special Taxation Rate
From origin of country and go through Custom clearance
Not on Positive List
Non-listed Products off Shelves, and no one knows whether it will come back again. Some delivery is expected to be started on Apr. 15
At Bonded Warehouse Hangzhou
Apr
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After Apr.08, New Rule is on
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Not on Positive List
As the new positive list published, the orders made on or after Apr 08 might meet some delay because of adjustment of procession procedures internally. Notice by leading e-commerce platform
New CBEC Special Taxation Rate
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Strategy Changing against Policy Changes
It might be a good time for overseas e-platforms to think of starting their Chinese market strategy as they will benefit more from delivery through post mail and express service and supplying wider range of goods which might not be operated through Direct Purchase and Bonded Warehouse of CBEC according to positive list.
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A picture was circulated crazily around Moments of WeChat. Liquid Milk is not on the Positive List, which makes suppliers and consumers anxious. Regarding those stocks at bonded warehouse or shipped on the sea, the problem is quite obvious that operators might suffer great loss if no specific measures brought up by the authority within a short notice.
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Pour Liquid Milk into the Sea?
As newly-updated positive list of CBEC in China has finally adopted liquid milk, milk powder, by communicating with bonded area, the operation of those categories have been pulled back to the normal track. So it is absolutely a good news to many of dairy suppliers overseas.
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You are now together with Chinese local CBEC pilot zones as well as leading e-commerce companies facing up this challenge which might have become the largest one after CBECâ&#x20AC;&#x2122;s birth in China. I will suggest you wait and see.
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What Affect Your Business after Revised CBEC Rule of Tax & Positive List Entering into Force on Apr. 08?
Positive List & TAX
Interpretation & Analysis
Chinese Authority & Experts
4-time repeated & Multilingual presentation
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END Prepared by Mai Fung
Special thanks to: 鷹熊匯 （KJDS - www.ikjds.com）and Chemlinked.com