Rate hike ends tax-free era for cross-border e-commerce business

China adjusted the tax structure for retail goods imported by e-commerce companies from April 8, replacing the luggage and postal taxes with added-value tax, consumption tax and customs duty. The tax on foreign infant formula and paper diapers, for example, will increase by about 12 percent, and that on golf equipment and luxury watches will become twice as high.

This essentially means consumers have to bid farewell to the de facto tax-free era of cross-border e-commerce and pay more for foreign goods.

The heavier tax burden will crush some small e-commerce companies and probably lead to a reshuffle of the sector whose boom started in 2014 because of low tax. The change in the tax structure reflects the government's resolve to boost domestic consumption.