China is changing tax rules for imported goods that are sold online in a move that will see beauty products such as eye creams and moisturizing gels from L'Oreal SA's Lancome and Korea's Amorepacific Corp. becoming cheaper for Chinese consumers.
The government will remove a special tax, or so-called parcel tax, that was previously levied on imports sold online. Instead, it will charge value-added and consumption duties that are currently imposed on most products sold in China but with a 30 percent discount, according to a Thursday statement posted on the website of the Ministry of Finance.
"Cosmetics will be the biggest beneficiary after the tax adjustment," said Catherine Tsang, a Hong Kong-based tax partner at PricewaterhouseCoopers LLP. As beauty and personal care is one of the most popular category among imports bought by China's Internet shoppers, any price cuts will further boost the market, Tsang said.
Riding on a wave of popularity from South Korea's TV dramas and music, Amorepacific's Etude House and other brands from the country are in demand among Chinese customers. For Korean products, cross border e-commerce has become a more direct and cheaper way to expand in China compared with setting up store networks.
The most popular categories of products being purchased online in China are consumer electronics, clothing and shoes, appliances, food and beverage, and beauty products, according to research firm Euromonitor International.