Fu Xinyi, an online seller of foreign goods, settles milk powder and health care products purchased from Australia in Chengdu, capital of southwest China’s Sichuan Province, April 7, 2016. China changed the tax rules on online retail goods from April 8 to level the playing field for e-commerce platforms and traditional retailers and importers. Retail goods purchased online will no longer be classified as “parcels,” which enjoy a “parcel tax” rate, lower than that on other imported goods. Instead, online purchases from overseas will be charged in the same way as any other imported goods.
Australian analysts say that China’s new tax rules for retail cross border e-commerce will not have a long-term impact on sales of Aussie products.
Stating from last Friday, retail goods purchased in cross-border e-commerce transactions are no longer treated as personal post articles but as imported goods, which are subject to tariffs, import VAT and consumption tax.
However, experts do not expect the move to have a long term impact.
Raymond Chan, managing partner at Morgans Financial Limited is one of the optimists. He says China’s rising middle class and an increasing appetite for Aussie products including infant formula and health supplements will still drive spending.
“Even if we take into consideration the increased tax, we talk about infant formula. With infant formula, if the Chinese customers [were] to purchase infant formula through the website, it is worth roughly around 50 dollars. However, if they purchase it through the store, it’s still worth around 80 dollars.”
In 2015, Chinese tourists visiting Australia’s shores spent more than six billion U.S. dollars in the country, with each person spending an average of about 5,000 U.S. dollars.