As Southeast Asia becomes one of the world’s fastest-growing beauty and skincare markets, “tax structure” has become a crucial factor influencing pricing competitiveness, gross profit margin, and market strategy when brands expand across borders.
In 2006, Polaroisin established a cosmetics factory in Shanghai. Enable the brands to have favorable tariff prices as exporting to Southeast Asian countries.
I. Composition of Taxes on Imported Cosmetics
Import taxes in most Southeast Asian countries consist of the following two main parts:
- Import Duty
- Determined by product HS Code and “Country of Origin”
- Whether or not a free trade agreement (FTA/RCEP/ACFTA) applies significant impact.
- Goods and Services Tax (VAT / GST / Sales Tax)
- Almost all Southeast Asian countries levy taxes.
- The tax base is typically:
CIF price + customs duty + other import-related costs.
II. Tax Structure of Taiwan’s Cosmetics Exports to Southeast Asia
1. Tariffs: Primarily based on MFN (Most Favored Nation) rates.
Taiwan has not yet joined the RCEP, nor has it signed FTAs with most Southeast Asian countries ; therefore:
- Cosmetics manufactured in Taiwan are exported to:
- Vietnam
- Thailand
- Indonesia
- Malaysia
- the Philippines
MFN tariff rates are generally applied (which may vary slightly depending on the tariff codes of each country).
→ Tariffs on Taiwanese exports to Southeast Asia are generally higher than those on mainland Chinese exports to Southeast Asia.
2. Consumption tax: levied as a fixed rate in each country.
Even exports from Taiwan are still subject to consumption tax in the destination country, for example:
- Vietnam: VAT
- Thailand: VAT
- Indonesia: VAT
- Singapore: GST
- Malaysia: Sales Tax
III. Tax Structure Characteristics of Cosmetics Exports from Mainland China to Southeast Asia
Tariffs: ACFTA/RCEP preferences may apply.
exports from mainland China to Southeast Asia lies in “country of origin preferences” :
- China is:
- Members of the China-ASEAN Free Trade Agreement (ACFTA)
- Regional Comprehensive Economic Partnership (RCEP) member countries
Advantages
- Tariff costs are significantly lower
- It is attractive to price-oriented brands with large market volume.
IV. Taiwan vs. China’s Exports to Southeast Asia: A Comparison of Taxes
| project | Taiwan exports to Southeast Asia | China’s exports to Southeast Asia |
| tariff | MFN tax rate | ACFTA / RCEP (tariff preferences) are applicable. |
| consumption tax | Must pay | Must pay |