April 3, 2012

 

China's customs deny tariff limit on milk powder

 

 

China's General Administration of Customs have denied that inbound travellers with milk powder worth more than RMB200 (US$31.76) will be subject to a levy, saying it is a misconception of a revised tax.

 

The administration released the revised classification of inbound items and corresponding tariffs last Monday, which stipulates that the duty-paid price, or dutiable price, of milk powder is RMB200 (US$31.76) per kilogramme and the tax rate is 10%.

 

The release was followed by reports on weibo, China's Twitter-like microblogging service, and childcare Web sites that inbound travellers carrying milk powder worth over RMB200 (US$31.76) would be subject to a duty equivalent to 10% of the item's value.

 

The administration said in a statement Friday that the newly-released tariff only applies to items exceeding a "reasonable amount for personal use."

 

Inbound travelers will not need to pay a duty on milk powder weighing less than 2.5 kilogrammes, according to the customs.

 

The administration also reiterated that it would not change the current policy, according to which inbound travellers would not be subject to a duty if the items they carry are worth no more than RMB5,000 (US$794.13).

 

The misinterpretation triggered complaints from Shenzhen residents, among whom buying milk powder in Hong Kong and Macao has become increasingly popular.

 

"There have been too many scandals about tainted domestic milk powder so we have grown accustomed to buying it from outside of the mainland. Another tax will add to our financial burden," said a woman, Liu, who lives in Nanshan District and frequently visits Hong Kong to buy baby formula for her daughter.

 

The misinterpretation drove some local residents to go to Hong Kong at the weekend to buy large amounts of baby formula to avoid a higher tax. The tariff is scheduled to take effect April 15.

 

"I learnt from the Internet about the RMB200 (US$31.76) tax threshold on milk powder, so I plan to buy as much as possible before the new tax takes effect," said an outbound woman at Shenzhen Bay Checkpoint on Saturday, who was heading to Hong Kong with a big case to hold baby formula.

 

Some suspect the alleged tax increase is aimed at benefiting domestic dairy companies.