Regulatory Summary of Cosmetics Cross-border E-commerce in China, 2016

In recent years, China's cross-border trade keeps an increase rate of more than 30%. It is expected that the annual cross-border electricity supplier trade volume reaches 6 trillion and 500 billion yuan in 2016. According to an uncompleted statistic, the number of cross-border business enterprises is more than 200,000 in China, and the number of platform enterprises is more than 5,000. Over 200,000 foreign trade enterprises develop cross-border business through platform. The economic model of cross-border electricity supplier will undoubtedly greatly stimulate the economic vitality of the Chinese market. Cross border electricity supplier can break trade barriers and price differences by breaking the traditional trade distribution. Commodities sold by cross-border electricity suppliers are generally consumer goods such as food, cosmetics, health products, medical devices, etc. There are a series of corresponding laws and regulations to supervise these kinds of products placed through traditional channels. However, the government still lacks related laws for cross-border e-commerce. If things go on like this, it is not beneficial for fairness of trade development. CIRS summarized main laws and regulations about cross-border e-commerce of cosmetics management in China, and gave detailed interpretations.  

New policy 1: 24 March, Notice on the Tax Policy of Import Retailing Goods by Cross-border E-commerce (Fiscal Tariff [2016] No. 18) was jointly issued by Ministry of Finance, General Administration of Customs and State Administration of Taxation. It was formally implemented on 8 April, 2016.

CIRS comments: From 8 April, import tax policy for general cargo was available for cosmetics through cross-border e-commerce, and the parcel tax was also adjusted.

Item

Before 8 April

After 8 April

product identification

stuff

goods

tax type

parcel tax

consolidated taxtariff, VAT and consumption tax

tax rate

50%

1) single transaction amount <2000 yuan; Individual annual turnover <20000 yuan: 70%(VAT+ consumption tax)

2) single transaction amount >2000 yuan; Individual annual turnover >20000 yuan: Full consolidated tax

duty free range

single transaction amount<1000 yuan

None

cosmetics parcel tax rate

50%

30%; 60%

According to this table, “4.8 New Policy” mainly aims at levying tax on low value goods. The taxation system of goods imported by cross-border e-commerce is basically consistent with that of the traditional channel.

New policy 2: Ministry of Finance, Development and Reform Commission and other 11 departments jointly announced "Import Retailing Product List of Cross-border E-commerce" (i.e., positive list) on 6 April. And "Second Batch of Import Retailing Product List of Cross-border E-commerce" was published on 15 April.

CIRS comments: Only the goods included in the list can be imported through cross-border e-commerce and sold on the platform of cross-border e-commerce. Other commodities shall be imported by general trading. First imported cosmetics are not included in the list. In accordance with the Positive list notes column, goods in the list are exempt from providing permit license to customs. The goods, in accordance with state laws and regulations about inspection and quarantine supervision, can be directly purchased without checking the customs clearance form. Custom clearance form is required for online shopping bonded goods when entering the "first-line" area, there is no need to check the custom clearance form when leaving the "second-line" area. Custom clearance form is the document required for custom clearance of imported goods, certifying that the goods have passed the custom inspection. For the import of cosmetics, in order to obtain the custom clearance form, certificate of origin, contract, invoice, packing list and bill of lading are required. Besides, the hygiene administrative approval license (or record-keeping certificate) issued by CFDA and others are also required. Therefore, the contents of the positive list notes that online shopping bonded cosmetics need to complete registration or record-keeping to import.

New policy 3: 13 April, Ministry of Finance Clarified the Products Notes in Import Retailing Product List of Cross-border E-commerce.

CIRS comments: The cosmetics imported through cross-border e-commerce, should obtain CFDA license in terms of relevant provisions.

New policy 4: On 25 May, Ministry of Finance issued an article about The Department of Custom Tariff of Ministry of Finance Talking about Supervision Measures of Cross-border E-commerce Retailing Import in the Transition Period.

CIRS comments: The responsible person points out that before 11 May 2017 (including 11 May), the government temporarily won’t require custom clearance form, registration or record-keeping certificates of online shopping bonded cosmetics, infant formula milk powder, medical device, special food (including food supplement, special medical use food, etc.) in 10 cities (including Tianjin, Shanghai, Hangzhou, Ningbo, Zhengzhou, Guangzhou, Shenzhen, Chongqing, Fuzhou, Pingtan, etc.) when the above mentioned goods enter the “first-line” area. The registration or record-keeping certificate of products mentioned above is not required for products by direct purchase in all cities.

New policy 5: Ministry of Finance issued a Notice on the Adjustment of Consumption Tax of Imported Cosmetics in its official website on 30 September. It came into force on 1 October.

CIRS comment: China's first reduction in cosmetics consumption tax since 2009.

Product type

Consumption tax

(Before 1 Oct 2016)

Consumption tax

(After 1 Oct 2016)

General beautifying and make-up cosmetics

30%

0

High-grade make-up and skincare cosmetics

30%

15%

Set of Cosmetics

30%

15%

Note: High-grade beautifying, make-up and skincare cosmetics: the cosmetics with sale price or duty-paid value (excluding VAT) higher than 10 rmb /ml (g) or 15 rmb /piece.

New policy 6: Ministry of Commerce published an article regarding Conversation of Extending Transition Period of Supervising Imported Cosmetics by Cross-border E-commerce on 15 November.

CIRS Comments: From 11 May 2016 to 11 May 2017, the government temporarily won’t require custom clearance form, registration or record-keeping certificates of online shopping bonded cosmetics, infant formula milk powder, medical device, special food (including food supplement, special medical use food, etc.) in 10 cities (including Tianjin, Shanghai, Hangzhou, Ningbo, Zhengzhou, Guangzhou, Shenzhen, Chongqing, Fuzhou, Pingtan etc) when the goods enter the “first-line” area. The registration or record-keeping certificate of products mentioned above is not required for products by direct purchasing in all cities. The article mentioned that the transition period will be further extended to the end of 2017, which means that registration exemption date of online shopping bonded cosmetics will be extended to 31 December, 2017. It is undoubtedly a good news for cross-border electricity supplier companies, as they have more time to quickly sell products. In addition, on 1 December, 2016, a very important new cosmetic regulation, Technical Safety Standard for Cosmetics, was implemented. Because of that, national cosmetics approval departments have a lot work to do. We know that the current registration number has brought a great burden to the approval department of CFDA. This extended period will erase this pressure.

New policy 7: The General Administrations of Customs issued the Notice No.75 2016, which is about to add the code of custom supervision. The provision began to implement on 1st December, 2016.

CIRS comments: Add the custom supervision code “1239”. The supervision code 1239 is called bonded cross-border trade e-commerce A (bonded e-commerce A). It is applicable to the cross-border e-commerce retailing products imported through special customs supervision or bonded logistics center (B-type) first-line entry for the e-commerce enterprises registered in China. The code “1239” will not be applicable to the 10 cities (Tianjin, Shanghai, Hangzhou, Ningbo, Fuzhou, Pingtan, Zhengzhou, Guangzhou, Shenzhen and Chongqing) for the business of cross-border e-commerce. In February 2014, the General Administration of Customs (GAC) released the Announcement No. 12 of 2014 on Adding the Code of Customs Surveillance, the new code 9610 called Cross-border E-commerce, abbreviated as e-commerce, was applicable to transaction through e-commerce platform for domestic individuals or e-commerce enterprises. On 1 August, 2014, the General Administrations of Customs has added the code of custom supervision 1210 which is commonly known as Customs No. 57. The full name is bonded cross-border trade e-commerce, referred to as bonded e-commerce. It is applicable to domestic individuals or e-commerce enterprises in the customs-approved e-commerce platform for cross-border transactions, and the goods should be imported and exported through special customs supervision areas or bonded areas. “1210” applied to special customs supervision area approved by the customs and bonded logistics center (Type B) to carry out cross-border trade e-commerce import pilot. That means “9610” and “1210” available for direct mailing and bonded mode respectively. Above 10 pilot cities are the first batch to carry out online shopping bonded import business. Other cities such as Xi'an and Taiyuan also carried out this business. However, the extension measures mentioned in new policy 4 and 6 are just for above 10 cities. The custom clearance form is still required for other pilot cities when bonded online shopping products enter into the “first-line” area. Therefore, above 10 cities are supervised by “1210”, and other cities supervised by “1239”.

According to a series of new policies for cross-border e-commerce in 2016, the state gradually unified trade tax system of cross-border electricity and traditional providers, and then further unified the pattern of product supervision. Besides, the state and local governments are strengthening surveillance on quality of online products. Although the cosmetics can be imported by cross-border e-commerce without CFDA license in above 10 cities before 31st December 2017, CIRS advices enterprises to start registration in advance, as the duration of registration needs half a year at least.


If you have any questions, please contact us at service@cirs-reach.com.