China gets tough with cross-border e-commerce and customs control

(jingdaily.com) - As the massive price gap between imported luxury goods in China and those abroad has hurt luxury sales in China, the shift toward spending abroad and daigou has caused the Chinese government to miss out on an especially large chunk of tax revenue. As the government gets serious about earning some of that revenue back, its policies appear to be creating major confusion in the short-term among brands and consumers. As cross-border e-commerce becomes increasingly popular, a new tax policy abruptly introduced by China’s government is intended to “level the playing field” for domestic and foreign sellers. On April 8, the new change that went into effect removed the “parcel tax” system from goods ordered from abroad, replacing it with import value-added tax (VAT) and consumption tax. For most luxury brands, this means a tax hike on cross-border e-commerce sales.