Breaking News: Consumption Tax Reduced in Cosmetics since Oct 2016

On 30thSep, National Ministry of Finance released a notice regarding the adjustment of consumption tax in cosmetics. From 1stOct 2016, the tax will be reduced from 30% to 15% for high-grade cosmetics for beautifying, make-up and skin care and whole set cosmetics. It is exempt to common cosmetics.

How to identify the high-grade and common cosmetics? 

The cosmetics with sale price or duty-paid value not including VAT higher than 10 rmb /ml (g) or 15 rmb /piece will be regarded as high-grade cosmetics.

Background

In 1993, the first regulation on consumption tax State Council Decree [1993] No. 135 was launched. The revised version was available in 2009. From then on, the consumption tax is 30% for cosmetics.

Comparison of consumption tax between old and new tax policy 

Item

Old policy

New policy

Object of tax

all types of cosmetics

high-grade cosmetics

Amount of tax

30%

high-grade cosmetics: 15%

common cosmetics: 0

This is first time to reduce the consumption tax of cosmetics in China since 2009. Certainly, the tax policy reform will be beneficial for both domestic and foreign SMEs and large enterprises to place cosmetics in China market.

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Source:

Notice concerning the adjustment of consumption tax in cosmetics

Notice regarding the adjustment of import linkage consumption tax in cosmetic