Are international cosmetic brands ready for the coup?


The proposal was submitted to the Chinese People’s Political Consultative Conference (CPPCC) recently (CPPCC) – a political advisory body.

According to local business media, the proposal was submitted by one of its members, Jing Zhu, chairman of Haima Automobile.

According to Hedy He, an analyst at Chemlinked, Jing believed that considering the improvement in living standards in China, cosmetics should be considered as daily necessities and not subject to consumption tax.

Jing added that removing the tax would further promote improved consumption in the country.

The last time China reformed the consumption tax rate was in 2016 when it reduced the consumption tax on cosmetics from 30% to 15%.

He noted that streamlining tax and fee cuts and tax categories has been a trend in tax reform in recent years.

Currently, the Chinese consumption tax applies to non-essential items, including high-end cosmetics.

This category of cosmetic products, which are defined as cosmetic products whose after-tax wholesale price exceeds RMB 10 per milliliter or RMB 15 per piece, is subject to a consumption tax of 15%.

He said CosmeticsDesign-AsiaThat many industry insiders believe there is a “Great possibility”This proposal will be adopted, and China will end the tax on cosmetics.

“The reduction in the consumption tax on cosmetics will not have much impact on national taxation, so the consumption tax on cosmetics could be a priority in tax reform.”

However, even if the proposal is accepted, it is possible that this will not happen soon, especially in light of the novel coronavirus (COVID-19) outbreak, which has had a huge impact on the health care industry. beauty.

“The consumption tax on cosmetics could be removed in the future but will not be implemented in the short term. Domestic brands have been heavily affected by COVID-19, removing the consumption tax will only make them worse. ”

This proposal would greatly benefit foreign cosmetic brands and further stimulate their development in the country’s lucrative beauty market.

“If the consumption tax is abolished, the profits from production, sales and manufacturing consignment will be greatly improved. Certain high-end cosmetic products financed by abroad can lower the price ”,he said.

Bad news for local brands?

On the other hand, the abolition of taxes would deal a blow to China’s burgeoning cosmetics industry, which consists of rising brands such as Pechoin, Catkin and Marie Dalgar.

“High-end products are rarely seen in domestic beauty products, so most domestic products do not need to pay consumption tax. If high-end foreign brands choose to reduce their prices due to the elimination of the consumption tax, the competitiveness of domestic brands in the market will be further weakened ”, he said.

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