Q: What restrictions are imposed by the offshore duty-free policy?

( chinadaily.com.cn )

Updated: 2011-05-29

A: The core of the offshore duty-free policy lies in that the application groups of the duty-free shopping cover a wide range, from passengers leaving the country to visitors leaving the island, including domestic citizens. Based on our experience overseas, we follow the principles of moderate strictness, steadiness and controllability and convenience and feasibility and impose four restrictions on the offshore duty-free policy, namely, variety, number of times, value, and amount.

First, it deals with the amount limited to 5,000 yuan ($770) for the duty-free shopping. Judging from the overseas experience, on South Korea’s Cheju Island, a passenger is limited to the duty-free shopping of 400,000 won ($363) at one time; on Japan’s Okinawa Island, a passenger is limited to the duty-free shopping of 200,000 yen ($2,441) at one time, and higher in the limit, but only the tariff with lower rates is removed. Whereas, on Hainan Island, the category of taxes stipulated by the offshore duty-free policy involves customs duties, import value-added duties, and consumption duties, far higher in preferential tax rates. Considering domestic and foreign situations, the amount of duty-free shopping is limited to 5,000 yuan per capita at one time, a moderate level.

Second, it is related to the limited number of the purchased goods. The duty-free policy allows passengers to purchase the duty-free goods just out of their own use within a reasonable amount. However, the profit-seeking consumption does not fit in with the spirit of this policy. So, in reference to the current duty-free goods on the basis of actual sales, in line with the principles of management, for the convenience of the consumer’s understanding, the policy stipulates the purchase quantity and range of the commodities of different kinds.

Third, the policy is related to the purchase of a single piece of goods worth more than 5,000 yuan per unit. Because the duty-free store offers a large number of commodities worth more than 5,000 yuan per unit, in order to afford the offshore passengers more chances to choose which goods to consume, the policy does not simply prohibit the passengers to purchase the goods worth more than 5,000 yuan per unit, while in accordance with the comprehensive elements such as controllability and operability in the duty reduction range, the policy grants offshore passengers the right to purchase a single piece of goods worth more than 5,000 yuan per unit per capita at one time on the condition that they have paid import duties for imported goods in full payment. Because the import tax rate on the imported goods is generally lower than the same imported goods (including customs duties, import value-added duties, and consumption duties), the goods purchased as this policy stipulated has lower tax rate than the same good bought in the general retail stores.

----by officials from the Customs Division of Ministry of Finance