Online platforms in China face new tax reporting rules
Change said to be aimed at ensuring level playing field.
New tax reporting regulations have been rolled out in China, requiring internet platform operators to submit tax information of those operating on their platforms, be they the sellers or workers.
The quarterly reports will include the names of the businesses and their revenues from relevant transactions. This applies to both domestic platforms as well as foreign ones that engage with the Chinese market.
According to the China Daily report published by the Ministry of Justice of the People's Republic of China, the new rules seek to ensure a level playing field in the digital space while improving the efficiency of tax services.
Joint legal practice Baker McKenzie FenXun, which believes swift and concrete actions should be taken to mitigate risks of non-compliance, also cited this levelling and pointed out: "The expansive scope means that even platforms that previously operated with little oversight from Chinese tax authorities must now adhere to stringent reporting requirements.
"The new regime aims to close loopholes and bring more entities under the purview of the Chinese tax system, ensuring a level playing field for all market participants. As a result, platforms need to invest in robust compliance systems and processes to fulfill reporting obligations and prevent potential penalties."
Meanwhile, it has been highlighted that the new regulations are not set to increase the tax burden for most of online platforms' merchants and workers if they comply with existing legislation. Current exemptions and preferential policies also remain in place.
Notably, e-commerce platforms will not have to resubmit information to tax authorities if it was already provided in withholding declarations or it is readily accessible through data-sharing channels of the government.
Professional services firm BDO noted as well: "Platforms do not have to submit tax information on individuals engaged in certain public convenience services, such as delivery, transportation, and domestic work, who either enjoy tax exemptions or are not subject to taxation under current laws."
It went on to clarify that reports will not be necessary for information generated before the effective date of the new tax rules, which was 13 June 2025. The first submissions are due in October.
"When conducting tax inspections, the STA (State Taxation Administration) may require platform operators to provide tax-related information such as contract orders, transaction details, financial accounts, logistics, etc., of sellers/employees suspected of violating the law," BDO elaborated further.
"Penalties will apply for noncompliance with the reporting rules, such as failure to submit or provide tax information by the stipulated deadline or concealing, omitting, or falsely reporting information."
Accordingly, tax authorities in China may order platform operators to rectify deficiencies and impose fines if they fail to do so.
As for the tax implications for those who are not exempted, tax experts at Alvarez & Marsal (A&M) said: "Taxable individual workers may experience changes in the amount of taxes withheld by platform operators due to the revised IIT (individual income tax) and VAT (value-added tax) withholding mechanisms.
"Affected individuals should reassess their tax positions to ensure accurate withholding and compliance."
According to A&M, the IIT withholding calculation formula has been changed, with the withholding amount expected to be lower in most cases.
Commenting on the reporting rules, the consultancy had this to say: "China's introduction of platform reporting obligations reflects the global trend toward enhanced tax transparency in the digital economy, as seen in the OECD's (Organisation for Economic Co-operation and Development) Model Rules for Reporting by Platform Operators.
"By leveraging the data collected under [State Council Order No. 810], Chinese tax authorities are poised to strengthen enforcement and improve tax collection from merchants and individuals earning income through online platforms."
Sellers and workers alike are advised to maintain accurate transaction records to avoid issues related to reporting discrepancies, while platform operators should take note of the revised tax withholding requirements in addition to their new reporting mandate.
