HMRC simplifies VAT guidance for Chinese firms selling goods in UK
VAT guidance by the UK authorities
The UK tax authority has issued simplified VAT guidance for overseas sellers, with a new translation for Chinese retailers who sell goods online into the country.
HMRC’s guidance, called ‘Selling goods using an online marketplace or direct to customers in the UK’, has been translated into simplified Mandarin to support those exporting goods from China to comply with UK import and VAT regulations.
In 2022, the UK imported £83.3bn in goods and services from China and Hong Kong. Online shopping accounted for 26.5% of all UK retail sales in 2022, with a substantial number of goods being bought from international sellers via online marketplaces.
HMRC is encouraging UK agents and shipping companies to share the simplified guidance with their customers.
The information explains when and how VAT and import duties must be charged to customers by international sellers. It explains the different processes for direct to customer sales, and for sellers using online marketplaces.
Marc Gill, HMRC’s Director for Individuals and Small Business Compliance, said: “We have been working closely with international partners to better understand what information overseas sellers need in order to comply with their UK tax obligations.
“We have acted on feedback from businesses to simplify and compile this online guidance into one, easily accessible place on GOV.UK. We have also recently published a simplified Mandarin translation of our guidance following research conducted with Chinese businesses.
“By making our VAT and import duty rules easier to understand, we will be able to increase tax compliance levels for online sellers. We are asking UK freight, customs and shipping agents to help us reduce the tax gap by sharing this simplified guidance with their customers. By working together, we can help everyone pay the right amount of tax at the right time.”
The financial sector continues to open up
China is continuing to open up its financial sector as it responds to changing conditions in the global economy, according to Lou Jiwei, head of the Global Asset Management Forum and China’s former finance minister.
He said as the sector opens up it will have to improve communication with domestic and foreign market entities, while making sure it complies with international rules and adopt global standards and best practices.
In addition, China should improve the rules for cross-border transactions between financial institutions’ parent company and subsidiaries, allow foreign institutions to share resources on domestic and overseas platforms, and optimize the ways foreign investors can participate in domestic financial markets, Lou said.
Further down the line, the country should allow foreign financial institutions to go public in the domestic capital market, he added.
Cao Yu, vice-chairman of the China Banking and Insurance Regulatory Commission, said the nation will match international economic and trade rules.
The Regional Comprehensive Economic Partnership agreement came into effect last year, laying the foundations for expanding institutional opening-up, Cao said. China will learn from the rules of high-standard economic and trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement, he added.
In recent years, Cao said, China has aligned with new international financial regulatory rules and carried out regulatory reform in the banking and insurance sectors. Going forward, the country will also explore and experiment in the areas of common concern such as climate change, green finance and the digital economy.
The increasing opening-up of China’s financial markets has provided new opportunities for investors to manage their wealth and allocate their funds, said Xuan Changneng, deputy governor of the People’s Bank of China, the country’s central bank.
As of the end of last year, the balance of renminbi assets held by foreign entities in China hit 9.6 trillion yuan ($1.4 trillion), a 1.2-fold increase since 2017. Among them, the balance of stocks and bonds reached 3.2 trillion yuan and 3.5 trillion yuan, respectively.
