Index > Authors> elitestage> Consumption Tax on High-end Cosmetics

Consumption Tax on High-end Cosmetics

Starting from October 1, 2016, the consumption tax is to be levied on high-end cosmetics at a tax rate of 15%, rather than the original 30%, while the consumption tax on ordinary cosmetics will be revoked. The State Administration of Taxation (SAT) has recently issued the Announcement on the Administration of Levying Consumption Tax on High-end Cosmetics (Announcement), which clarifies the issues concerning the administration of consumption tax on high-end cosmetics.


The management of consumption tax deductions has been specified. According to the Announcement, starting from October 1, 2016, any taxpayer of the high-end cosmetics consumption tax, if continuing to manufacture high-end cosmetics from the high-end cosmetics the taxpayer purchases outside, imports or takes back from entrusted processing, are to be allowed to deduct the paid consumption taxes in the purchase, import and entrusted processing stages from taxes payable.


"Before this adjustment, the consumption tax policy has stipulated that any taxpayer who continues to manufacture taxable cosmetics from the cosmetics the taxpayer purchases from outside, imports or takes back from entrusted processing as the raw materials is allowed to deduct the consumption taxes. To ensure policy continuity, the Announcement provides theregulations," said an official from the SAT Goods and Services Taxation Department.


The time of consumption tax deductions has been set. According to the Announcement, any taxpayer who manufactures high-end cosmetics from the cosmetics the taxpayer purchases outsides, imports or takes back from entrusted processing with the taxes already paid, shall establish the ledgers for the deduction of consumption tax on high-end cosmetics based on the deduction vouchers issued before October 1, 2016, and set aside consumption tax deductable at the original consumption tax rate before November 30. This move will allow the full deduction of consumption tax on cosmetics used for continued manufacturing.


"This reform of cosmetics consumption tax adapts to residents' requirements for consumption upgrades and the rapid development of China's economy especially of the cosmetics industry, and will be able to support the further expansion of the cosmetics markets, and provide more high-quality and cost-effective products to consumers and ultimately benefit them," said Tang Jiqiang, professor at Southwestern University of Finance and Economics and chief research fellow at Xicai Thinktank.

----------------

Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.