New Delhi, Jan 5: Chinese authorities have stepped up tax collection from online sellers as part of a broader push to boost government revenues amid slowing economic growth, a report has said.
Ecommerce platforms asked to share seller data
Since a new tax law came into force in October, ecommerce platforms such as Alibaba, Shein and Amazon have begun sharing detailed data with tax authorities.
The information includes merchants’ names, orders, sales figures, profits and even income from virtual gifts or digital tokens, according to documents released by local tax bureaus, according to Financial Times report.
Tax revenues from ecommerce rise
Officials said the move is already paying off. By the end of the third quarter, more than 7,000 ecommerce platforms had submitted tax-related data, according to Lian Qifeng, a director at the State Taxation Administration.
Speaking at a briefing in December, Lian said this helped drive a 12.7 per cent rise in tax revenue from ecommerce platforms in the third quarter compared with a year earlier, although he did not disclose the total amount collected.
Economic slowdown pushes revenue hunt
The crackdown comes at a time when China’s economy is under pressure. Growth slowed to its weakest pace in a year in the third quarter, weighed down by the US trade war and a prolonged slump in the property sector.
With land sales collapsing and traditional revenue sources drying up, Beijing is increasingly looking to the fast-growing online economy for fresh fiscal income, including from merchants, influencers and livestreamers.
Broader campaigns to strengthen collections
To strengthen collections, the State Taxation Administration has launched several campaigns.
These include pushing mainland investors to pay 20 per cent tax on global capital gains, cutting back tax incentives in regions accused of fuelling industrial overcapacity, and cracking down on companies that inflate invoices to claim fraudulent tax rebates.
Online retail scale and enforcement gaps
Online sales of physical goods reached Rmb12.8tn ($1.8tn) in 2024, accounting for nearly 27 per cent of China’s total retail sales, according to official data.
However, analysts say online businesses have historically contributed less to tax revenues than brick-and-mortar stores. Although platforms have technically been required to submit sales data since 2019, enforcement was weak.
New law tightens oversight, raises concerns
The new law introduces clearer rules and strict deadlines, leading to tighter oversight. Lian said tax authorities have repeatedly warned sellers whose self-declared income was far lower than figures reported by platforms.
He noted that this has helped narrow the tax gap between online and offline merchants. Legal experts said the shift marks a turning point.
“Data-driven taxation has become the ultimate weapon in the authorities’ toolbox,” said Quan Kaiming, a partner at Shanghai-based Allbright Law Offices.
While the new rules promote fair competition, he warned that they also raise compliance costs and data security risks, especially for influencers and livestreaming businesses.
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Merchants fear impact on margins
Many online sellers are worried about the impact on already thin margins. Companies with annual sales above Rmb5mn face a value-added tax of 13 per cent, a level some merchants say could wipe out profits.
However, Alibaba, Shein and Amazon did not respond to the matter yet.
(Disclaimer: Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)
