(Source: https://pltfrm.com.cn)
Understanding the tax structure and associated duties is essential for any overseas merchant aiming to sell products in China via platforms like Pinduoduo. Here’s a guide on how to calculate taxes and duties for your products:
1. Category-Based Tax Rates:
China categorizes imported goods into various segments, and each category attracts a specific tax rate. Before listing your products, ascertain the category they fall under and the corresponding tax rate.
2. Value-Added Tax (VAT):
Imported goods sold in China are usually subject to a VAT. The standard VAT rate is 13% for certain goods and 9% for others, but rates can vary based on the product type.
3. Customs Duties:
Apart from VAT, customs duties might apply depending on the product. This is calculated based on the Customs Valuation, which includes the product’s cost, insurance, and freight (CIF).
4. Consumption Tax:
Some luxury goods or specific categories like alcohol and tobacco are subjected to an additional consumption tax. Ensure you check if your product falls under these categories.
5. Cross-Border E-Commerce Tax Policy:
To promote cross-border e-commerce, China introduced a new tax policy that offers preferential rates for products sold through cross-border e-commerce channels. This includes:
- Single transaction limit: Products valued under a specific threshold (e.g., 2,000 RMB) might be taxed at preferential rates.
- Annual transaction limit: Each consumer has an annual purchase limit (e.g., 20,000 RMB), beyond which standard taxes apply.
6. Utilize Online Calculators:
Some websites and tools offer tax and duty calculators for cross-border e-commerce in China. By entering product details and values, these tools provide an estimated tax amount.
7. Work with Local Experts:
To navigate the intricate Chinese tax system, consider collaborating with local financial experts or consultants who specialize in cross-border e-commerce.
8. Stay Updated:
China’s tax policies, especially related to cross-border e-commerce, are evolving. Regularly check official channels or industry news to stay informed about any changes.
9. Factor in Other Costs:
While calculating profitability, besides taxes and duties, consider other costs like shipping, returns, platform fees, marketing costs, and any service fees from third-party providers.
In summary, calculating taxes and duties requires diligence and an understanding of the Chinese tax system. By being proactive and ensuring compliance with all tax-related regulations, merchants can avoid unnecessary hiccups and ensure a smooth selling experience on Pinduoduo.
PLTFRM is an international brand consulting agency that works with companies such as Red, Tiktok, Tmall, Baidu, and other well-known Chinese internet e-commerce platforms. We have been working with Chile Cherries for many years, reaching Chinese consumers in depth through different platforms and realizing that Chile Cherries exports in China account for 97% of the total exports in Asia. Contact us and we will help you find the best China e-commerce platform for you. Search pltfrm for a free consultation!
