China reduces tax on cosmetics from 30% to 15%

This is a significant reduction from the 30% tax previously applied to all cosmetics and now premium products will be taxed at a rate of 15% while tax on non-luxury cosmetic products will be waived entirely.

 

The tax cut comes into place since 1 October 2016. This updated tax rate was only likely to have a “moderate” impact on domestic demand with a shift in purchasing patterns that has seen cosmetics become an every day expense rather than a luxury.

However, import tax remains at 10% in the region and VAT is still set at 17%. This means that cosmetics in China will remain relatively expensive compared to international markets.


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