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Cross-border e-commerce companies encounter trouble with new tax rules


05-12-2016 16:26 BJT

China's new tax rules for cross-border e-commerce companies have been effective for a month now and some businesses have had problems. To help out, it's reported that Chinese tax regulators are planning a year-long transitional period so that the companies can reset their sails.

Many companies reduced their imports and focused on eliminating the stock in their bonded warehouses after the new tax rules were implemented.

"There's been no replenishment for half a month, and we are mainly reducing the stock. Orders have dropped around 60 percent. In the past we had 200 workers working busily. But now we have 70 people and can finish the work before the off duty time," said Sun Changha, deputy director of Zhengzhou Warehouse, High Store Tech.

Only 3 percent of the goods in the Zhengzhou tariff-free zone meet the new requirements according to China's positive list. Some e-commerce dealers have to transfer their goods to overseas warehouses to reduce their stocks. That's cost the companies some money.

"The salary of employees overseas is much higher than inside the country. And as the overseas warehouses are used more, the efficiency of domestic warehouses is lower, which will lead to extra costs. As there might be more policy adjustments in the future, the operating costs of overseas warehouses will increase a lot," said Qiu Guoxun, CFO of xianlife.com.

It's been reported that tax regulators will provide a 12-month transitional period and adjust policies accordingly. Cross-border e-commers dealers hope they will be able to regain their advantage during that time.

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