Retailers sentenced for skirting import tax

A Shanghai court on Monday sentenced two female shop owners to one year in prison, suspended for 18 months, for buying duty free goods in South Korea and bringing them into China to sell online in 2012, avoiding tens of thousands of yuan in import taxes.

The sentence, which includes fines for the two smugglers, recalls the high-profile case of former flight attendant Li Xiaohang, who has launched an appeal against her 11-year prison term imposed by a court in Beijing for her evasion of 1.09 million yuan ($170,000) in taxes when transporting cosmetic products from South Korea to China on numerous occasions between 2010 and August 2011. Li is still waiting for a decision by the High People's Court of Beijing.

Li's case has been hotly debated, and her sentence is widely considered too harsh.

Legal experts said law enforcement departments should not be arbitrary or selective when deciding who to charge with criminal offenses, because overseas purchase services are rampant. It is estimated there are 100,000 such purchasing agents across the country.

They also urged lawmakers to review customs taxes which are much higher than the world average, giving rise to overseas purchasing services.

According to the No 1 Intermediate People's Court of Shanghai, the two suspects, identified as Liu Xinxin and Fan Lin, were convicted of smuggling goods. In addition to their suspended prison terms, Liu was fined 100,000 yuan and Fan was fined 81,000 yuan.

This is the first case in Shanghai convicting overseas buyers, the court said. Fan carried 473 cosmetic products, wristwatches, bags and small medical instruments - including 411 pieces commissioned by Liu - in her luggage and did not declare them as imported goods at customs in Shanghai Pudong International Airport in April 2012.

One month later, Liu was caught carrying 307 cosmetics, wristwatches and bags without declaring them to customs officials when flying to Shanghai from Seoul.

Both are shop owners on Taobao, the country's largest online trading platform, where they sell products that are first ordered on the website of a duty-free shop in South Korea and later picked up from the country, the court said.

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