On 24 March 2016, the Ministry of Finance, together with the General Administration of Customs and the State Administration of Taxation of the People’s Republic of China, released the Circular on Tax Policy for Cross-Border E-commerce Retail Imports (“E-commerce Tax Circular”) (Cai Guan Shui [2016] No.18) (“E-commerce Tax Circular” ). The E-commerce Tax Circular significantly changed the preferential tax policies that had been applied to cross-border e-commerce transactions. It stipulated that imported goods purchased by individual customers under both the direct shipping model and the bonded warehouse model shall be subject to import taxes including tariffs, import value-added tax (VAT), and consumer tax (if applicable). It also introduced a limit of RMB 2,000 for a single transaction and RMB 20,000 for yearly transactions for individual customers. Transactions within the limit enjoy a temporary 0% tariff rate, but are still subject to import VAT and consumer tax, which are charged at 70% of the taxable amount under the general trade model.

The implementation of the E-commerce Tax Circular was set for April 4, 2016. However, facing pushback, in May 2016, Ministry of Finance delayed its implementation until May 2017. In November 2016, Ministry of Commerce again delayed its implementation until the beginning of 2018. In March 2017, a spokesman from Ministry of Commerce announced that goods coming through the cross-border channel would continue to be temporarily regulated as personal parcels. On November 7, 2018, Yan Fangli, Director of the Department of Electronic Commerce and Information Technology of the Ministry of Commerce, said at a news release during the China International Import Expo that the general idea of “temporary supervision of personal parcels” would continue next year. That is, the implementation of the E-commerce Tax Circular will continue to be delayed in the year of 2019.