China cuts consumption tax on cosmetics

eye shadow and make-up brushes isolated on white

At the end of September the finance ministry announced that China will reduce the tax applied to all cosmetics from the previously 30% to 15% for expensive cosmetics, and will remove the entire consumption tax for non luxury commodities, in order to increase the economic growth of the sector, the consumption, and the domestic spending.

The plan became effective on October 1st and the main goal is to reduce the foreign acquisition of products and the stalling economy, selling more affordable «domestic» products and rising the domestic demand. Analysts underlined that the cuts may eventually help the imported cosmetics brands, but are unlikely to have a major or immediate impact because many steep tariffs domestically prices will remain high, compared to overseas markets.

The main problem will be that import tax will remains at 10% in the region and VAT is still set at 17%; this means that cosmetics and personal care products, in China, will still remain relatively expensive compared to international markets, considering that this measure follows another one, taken last year in china: the import taxes reduction.