(Yicai Global) Nov. 22 -- China's cabinet has decided to more than double the value of products individuals can purchase online from abroad without paying import tax.
The State Council ruled at an executive meeting yesterday to increase the duty-free allowance to CNY5,000 (USD720) for a single transaction from the current CNY2,000 limit. It also plans to extend the annual limit to CNY26,000 from CNY20,000 and open up 17 more cities where the policy can be exploited, from the existing five.
China's finance ministry and customs and tax administrations announced they would levy tax on cross-border e-commerce purchases from early April 2016 in order to create fair competition in the market. But in May, the State Council granted a year-long period to make changes to the policy. At an executive meeting in September 2017, the cabinet agreed to extend that transition period to the end of this year.
The new measures will take place from Jan. 1 and will increase in line with residents' income. Previously, such allowances were set for a one-year term.
"I think the long-term extension of the validity of the policies will allow for constant optimization and improvement dynamically," Xu Ping, president of the Henan Imported Materials Public Bonded Center, told Yicai Global.
The change will promote development of cross-border e-commerce and improve China's opening up while facilitating stable growth of imports and exports, according to a public announcement following the meeting. It will also be a driving force of the economy and stimulate consumption to create more job opportunities, it added.