A new tax system will be implemented for cross-border e-commerce retail sales, said Ministry of Finance, the General Administration of Customs and the State Administration of Taxation on Thursday.

A new tax system will be implemented for cross-border e-commerce retail sales, said Ministry of Finance, the General Administration of Customs and the State Administration of Taxation on Thursday, Economic Daily reported.

The implementation, which will come into effect on April 8, will offer cross-border businesses as well as traditional retailers a more fair competition mechanism.

As Chinese customers' overseas shopping spree and cross-border e-commerce craze get red hot, despite of a 7 percent downfall in China's import and export data, the growth rate of cross-border e-commerce went up to 30 percent.

As a much debated tax, personal postal articles tax is levied on cross-border e-commerce retailers. According to Wang Wei, director of Institute of Market Economy of Development Research Center of the State Council, in the early stage of cross-border e-commerce development, China levies personal postal articles tax on retailers, which is a collective tax including imported goods tariff , import value-added tax and consumption tax.

China levies personal postal articles tax on imported goods which are under 1,000 yuan, and the tax rate are mostly 10 percent. Goods with taxes under 50 yuan are exempt from Customs tax, said Wang.

It is an important reason why cross-border e-commerce is quite popular since compared to traditional import trade, the tax burden level is relatively low, according to Wang.

As more people demand overseas goods, the online purchasing agent takes advantage of personal postal articles tax and ditched the old way of wholesales and adopted new methods such as repackaging and mailing products separately to avoid tax.

Statistics showed that in 2014, cross-border e-commerce and overseas consumptions reached hundreds of billions of yuan, however, the personal postal articles tax was under 1.3 billion yuan, which shows a big loss of tax revenue.

The new policy only allows a maximum of 2,000 yuan of single transfer in cross-border retail and a maximum of 20,000 yuan per person per year. "Within the range, the tax rate is set for zero percent temporarily," said authority with Ministry of Finance. Any goods that exceed the range will be levied full tax on general trade.

The tax rate is indeed higher compared to what it used to be but it won't affect consumers too much, authority with Ministry of Finance said.

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