Tuesday, 15 November 2016 10:34

Chinese new tax rate policy for cosmetics

China reduces the rate of the consumption tax on cosmetic products as part of a thirteenth five-year plan, approved by the PRC government, which aims to stimulate domestic spending and stir growth. A good sign for imported cosmetic brands.

According to the Circular 103 [2016] released by the Chinese Ministry of Finance and State Administration of Taxation on September 30th 2016, the rate of consumption tax on cosmetics has been reduced from 30% to 15%. Except for its tax rate, this product category has been renamed as well, from “cosmetics” into “top grade cosmetics”, including perfumes, sets and top grade skin care cosmetics, which refer to those products with a final price above 10 RMB/ ml or g, or 15 RMB per slice.

This new policy is part of the thirteenth five-year plan approved by the PRC government this year, and will likely affect imported cosmetics’ retail prices. The move, which came into effect from Oct. 1st 2016, fits with China's drive to make products more affordable to domestic shoppers, many of whom have traditionally looked to buy more expensive products overseas because of high tax rates in their country. The cuts could be of some help to imported cosmetics brands, which dominate the high-end segment of the market, but are unlikely to have a major or immediate impact because other steep tariffs mean prices domestically will remain high compared to markets overseas.

Therefore we can already forecast that, in the next future, this policy and the resulting appraisal of those cosmetics which will be imported in China, will be one of the key points of the PRC custom.

For more information contact our Shanghai office www.kelmer.com/shanghai

SourceChinese Ministry of Finance and State Administration of Taxation - Caishui [2016] Circular 103 

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