China to Reduce Import Tax on Some Commodities

China plans to reduce import taxes for items such as food, cosmetics and jewelry to stop people buying them overseas or through agents.

The move is aimed at saving billions of yuan in lost tax revenue.

The value of goods bought through overseas purchasing hit 12 billion yuan (HK$14.21 billion) last year, according to the China E-Business Research Center. The amount is estimated to soar to nearly 48 billion yuan in 2012.

Most overseas purchasing escapes import duty ranging from 10 to more than 100 percent.

The State Administration of Taxation has indicated that lower duty for some items is in the pipeline so the goods can be imported in the normal way and tax revenue will not be lost, the Economic Observer News reported.

China may adjust the import consumption tax - including canceling the tax on cosmetics in the near term and on gold and jewelry in the long run - - and further cut import customs duty.

Many residents of Shenzhen, Zhuhai and other cities have been making special trips to Hong Kong and Macau to buy daily necessities which are more expensive in the mainland because of inflation and high taxes. Milk powder, cosmetics and information technology products are among the most popular bought outside the mainland.

The country's customs levies a value- added tax rate of 17 percent and a customs duty rate of 5 to 40 percent on milk powder.