CHINA - ANALYSIS ON THE SECOND EXTENSION OF THE TRANSITIONAL PERIOD FOR THE SUPERVISION POLICY ON CROSS-BORDER ELECTRONIC COMMERCE

On 20 September 2017, Li Keqiang presided over the executive meeting of the State Council. On the meeting, it was decided to extend the transitional period for the  supervision policy on retail and import of cross-border electronic commerce to the end of 2018 and speed up the improvement of the system. The news immediately aroused widespread concern in the industry.

The policy document on retail and import refers to the Notice of the Ministry of Finance on the taxation policy of retail and import of cross-border electronic commerce (No.18, 2016 of Ministry of Finance and General Administration of Customs). No clear documents have been issued by the State Council or other relevant ministries. It is not clear what specific policies are included in the transitional period, especially for special categories of food, such as infant formula milk powder as covered in the “Announcement on the publishing of the commodity list of retail and import of cross-border electronic commerce” and the “Announcement on the publishing of the commodity list (second batch) of retail and import of cross-border electronic commerce” which is also the positive list of commodity referred to by industry. According to the provisions of the China Food and Drug Administration, from January 1, 2018, both domestic and imported infant formula milk powder shall be registered through the China Food and Drug Administration. The remarks in the “Commodity list of retail and import of cross-border electronic commerce” issued by the Ministry of Finance define that cross-border e-commerce products are also covered. So the industry is in urgent need of the document to be issued by relevant regulatory authorities to because the development of cross-border electronic commerce of infant formula milk powder may be affected.

The extension of the transitional period with one year creates  time for the practitioners of cross-border electronic commerce to adjust but it cannot solve the fundamental problem. Once the transitional period is over, the final policy will be released, cross-border electronic commerce will face the problems of the “positive list”, “Single quota of 2000 yuan, and annual quota of 20000” again, etc.; in the long term, although there are some uncertainties, the changes will not affect the overall trend. From the meeting of the State Council we can see that the country is supporting the development of cross-border electronic commerce. If there were adjustment in the future, adjustment may mainly focus on the taxation, category of list and buying quota.

It is known that the relevant supervision authorities of cross-border electronic commerce are the Ministry of Commerce, the Ministry of Finance, the State Administration of Taxation, AQSIQ, General Administration of Customs among others. All cross-border electronic commerce companies should keep a close eye on the latest policy developments issued by these departments, including but not limited to positive lists, negative lists (mainly referred to the listed products in â€œWork specification of business entity of cross-border e-commerceand commodity filing management” issued by AQSIQ”), tariffs, quotas and other types of dynamic conditions.