'Singles Day' parcel boom creates tax loophole headache for customs offices

The "Singles Day" promotions of Alibaba Group Holding's Taobao and other e-commerce giants have boosted express parcel volumes this month, but also opened a loophole for tax avoidance that presents a challenge to customs authorities in the region.

Taipei Customs said it was concerned that there would be more duty avoidance through the use of e-commerce during the Singles Day promotion period, and as a result it had implemented more stringent inspection of express parcels in November, especially in response to Taobao's promotion activities.

Singles Day on November 11, a Chinese version of Valentine's Day for people without romantic partners, has become the busiest online shopping day in China.

Unlike traditional trade, in which goods go through customs clearance as cargo, goods bought online are normally shipped by express delivery and receive customs clearance as parcels.

Since parcels valued at under NT$3,000 (HK$760) are exempt from customs duty and business tax in Taiwan, e-commerce has created a loophole for tax avoidance.

"Some unscrupulous industry participants tend to go through customs clearance late at night and under-report the value of parcels in customs declarations, or break up the parcels into smaller ones in order to avoid duty and tax," Taipei Customs said in an e-mailed reply to queries from the South China Morning Post.

Taipei Customs said that between 2011 and 2013, the number of declared express parcels sent from the mainland, Hong Kong and Macau to Taipei was 15 to 16 times that of declared pieces of other goods, while the volume of imported express parcels was 8 to 9 per cent higher in November last year than the month before.