Consumption taxes on certain luxury goods are likely to be reduced to make mainlandproduced items more competitive in dutyfree shops, said the State Administration of Taxation. Officials did not say by how much they planned to cut the tax, which manufacturers pay at the wholesale level but pass on to customers at the retail level.
For example, a bottle of Chinese-made perfume carries a 30 per cent consumption tax, but it is likely to be much cheaper than an imported brand in a regular department store because of an import tax of at least 100 per cent. However in a duty-free store, the import may actually be cheaper.
"With tax-free incentives, local manufacturers will be encouraged to make high-quality goods to compete with imports," said Wang Yao, from the China General Chamber of Commerce's information department.
China's 150 duty-free stores have combined annual sales of Yn2.5bn, 80 per cent of which is made up of luxury goods such as perfume, alcohol, handbags and watches.