Multiple Platforms Release Rules on Tax-Related Information Reporting; E-commerce Tax Compliance Becomes a Matter of Survival

Editor's Note: In June 2025, the "Rules on the Reporting of Tax-Related Information by Internet Platform Enterprises" and supporting tax policies were officially implemented, marking a new phase in China's e-commerce tax collection and management. By establishing platform information reporting obligations, the new regulations effectively address the long-standing challenge of "information asymmetry" in collection and management, placing higher demands on compliance management for various e-commerce operators. This article analyzes the core points of the new regulations, the identification of tax-related risks, and provides compliance recommendations, offering reference for market entities to adapt to the new regulatory environment.

I. Analysis of the New Regulations: A Fundamental Shift in E-commerce Tax Collection and Management Model

The implementation of these new regulations restructures the basic logic of e-commerce tax collection and management from the following three levels:

(I) Comprehensive Regulatory Coverage

The new regulations explicitly include online product sales platforms within the tax supervision system for the first time. Their scope of application not only covers traditional B2C e-commerce platforms but also extends to emerging business models such as social e-commerce, live-streaming sales, and community group buying. According to the regulations, any legal person or unincorporated organization that provides profit-making services such as online business premises, transaction matching, or information release for online trading activities must undertake the obligation to report tax-related information.

Specifically, the new regulations bring the following seven types of platforms under supervision: online product sales platforms, live-streaming platforms, online freight platforms, flexible employment platforms, platforms providing services like education and healthcare, aggregated service platforms, as well as new platform forms like mini-programs and quick apps. This detailed classification method maximizes the regulatory scope, effectively preventing regulatory lag caused by business model innovation.

(II) Full Transparency in Information Reporting

The new regulations require platform enterprises to report two main categories of tax-related information: first, basic platform information, including domain names, business types, operating entity information, etc.; second, identity and income information of operators and practitioners within the platform. The reporting requirements for income information are particularly detailed, covering key data such as total taxable sales, refund amounts, and net revenue. It is noteworthy that the new regulations specify that the point of revenue recognition is "the date on which sales proceeds are received or a voucher claiming the right to collect sales proceeds is obtained." This aligns with the revenue recognition principles of the current Value-Added Tax and Corporate Income Tax laws, and amounts corresponding to refunds and brush orders (fake transactions) cannot be deducted. For non-monetary economic benefits, conversion to Renminbi must be based on the platform's conversion rules on the actual date of acquisition, reflecting the thoroughness of the regulation.

 

(III) Substantive Platform Responsibilities

The new regulations assign platform enterprises substantive tax assistance obligations. Platforms are not only required to standardize the retention of tax-related information but are also responsible for the authenticity, accuracy, and completeness of the reported information. Failure to report as required, concealment, or misreporting may result in fines ranging from 20,000 to 500,000 RMB, and in serious cases, suspension of business for rectification. More importantly, when platforms handle withholding declarations or act as agents for declarations for practitioners, they must ensure the authenticity of the business and properly retain supporting evidence such as real-name verification records, transaction details, and payment records. This regulation makes platforms a crucial link in the tax collection and management system.

II. Risk Perspective: Three Major Tax-Related Risks Faced by E-commerce Operators

In the new regulatory environment, e-commerce operators need to focus on the following three types of tax-related risks:

(I) Risk of Concealing Sales Revenue

From 2021 to 2023, online streamer Li Mu engaged in live-streaming e-commerce sales in the name of an individual and a sole proprietorship business he established. He concealed sales revenue through methods like receiving payments into personal accounts and filed false declarations, underpaying Individual Income Tax, VAT, and other taxes and fees totaling 2.435 million RMB. In March 2024, based on relevant laws and regulations, the tax authorities made a decision to recover taxes and fees, collect late payment surcharges, and impose a fine, totaling 4.0214 million RMB.

After the implementation of the new regulations, this risk is further amplified. Platforms are required to report all pre-tax income information to the tax authorities, providing a direct data benchmark for comparison. Cross-verification with third-party information like bank statements will make any anomalies easily detectable. According to Article 35 of the "Tax Collection and Administration Law," tax authorities have the right to implement assessed collection on taxpayers whose declared income is significantly low without justifiable reason. If it constitutes tax evasion, it may not only require payment of back taxes and late payment surcharges but also face fines of 0.5 to 5 times the amount evaded. In serious cases, criminal liability may also be incurred.

(II) Risk of Inflating Sales through Brush Orders (Fake Transactions)

In practice, there have been multiple cases in the e-commerce sector where income from brush orders led to a serious discrepancy between "real income" and declared data, triggering tax audits. After the implementation of the new regulations, the false sales volume generated by brush orders will be included in the data reported by platforms to regulatory authorities. If this data shows a significant difference from the enterprise's actual declared income, it can easily trigger a tax audit; if the enterprise fails to make adjustments during tax filing, it may also constitute false declaration.

Furthermore, if brush orders involve the fraudulent issuance of invoices, the merchant may face administrative or even criminal liability risks; if brush order data is used to obtain loans or government subsidies, it may further constitute fraud-related crimes. Additionally, expenses incurred due to brush orders do not qualify as reasonable business expenses and cannot be deducted before Corporate Income Tax. It is particularly important to note that if an operator claims that the brush order portion should not be taxed, they bear a heavy burden of proof. Even if evidence can be provided, if invoices have been issued or the formal requirements for revenue recognition are met, the tax authorities may still not recognize the tax exemption claim.

(III) Risk of Abusing Tax Incentives

In practice, some operators register dozens of market entities in multiple tax preferential areas, artificially splitting the same business to utilize the assessed collection policy and reduce the actual tax burden. According to the "Corporate Income Tax Law" and the "Individual Income Tax Law," tax authorities have the right to make tax adjustments for arrangements that lack a reasonable business purpose. Whether such arrangements constitute abuse is primarily determined by referring to the following criteria: whether the relevant market entities possess economic substance, whether the business split has commercial rationality, and whether the transaction pricing complies with the arm's length principle. Once identified as an abuse of tax incentives, the enterprise will not only have the relevant qualifications revoked but will also need to pay back the tax difference for previous years and corresponding late payment surcharges. According to the "Tax Collection and Administration Law" and its implementation detailed rules, for tax evasion, tax refusal, tax fraud, and tax arrears, the tax authorities' recovery of the unpaid, underpaid taxes, late payment surcharges, or defrauded taxes is not subject to the statute of limitations.

 

III. Compliance Recommendations: Building a Tax Management System Adapted to the New Regulations

To address the challenges of the new regulations, e-commerce operators should improve their compliance systems from the following four aspects:

(I) Restructure Business Processes and Internal Control Mechanisms

Ensure the achievement of "Four Flows Unification," meaning the consistency of the business flow, contract flow, invoice flow, and capital flow. Specific measures include: establishing a dedicated corporate account to receive platform payments, strictly separating business accounts from personal accounts; improving contract management systems to ensure all transactions are supported by compliant agreements; standardizing invoice management processes. Simultaneously, establish a regular reconciliation mechanism to cross-check platform reports, bank statements, and tax returns, promptly identifying and correcting discrepancies.

(II) Optimize Accounting and Tax Declaration

Strictly handle accounting matters according to Accounting Standards and tax law requirements. Set up subsidiary ledgers for special businesses like brush orders and make active adjustments during tax declaration. Improve the methods for collecting and allocating costs and expenses to ensure cost accounting is true and reasonable. Establish a multi-level review mechanism during the tax declaration process, focusing on key tax types, creating checklists for easily overlooked taxes, and properly retaining all declaration materials.

(III) Improve Voucher Management and Archiving Systems

 

Establish a comprehensive voucher management system, including: retaining complete transaction contracts, keeping detailed logistics vouchers and delivery records, properly managing fund settlement vouchers, and organizing consumer communication records and after-sales service materials. For large-value or special businesses, special archives should be established, preserving evidence of the entire process from transaction negotiation to fulfillment.

(IV) Utilize Policies and Professional Support Wisely

Reasonably apply tax incentive policies under the premise of compliance, such as VAT reductions for small and low-profit enterprises, and income tax benefits, but ensure eligibility conditions are met. For complex tax issues, it is advisable to seek support from professional tax consultants promptly, especially in the early stages of the new regulations' implementation. Professional advice helps accurately grasp compliance requirements and avoid tax risks arising from misinterpretation.

IV. Summary

The implementation of the new internet tax-related regulations marks the entry of e-commerce tax collection and management into a new stage. It reflects both the requirements of the principle of tax legality and innovations in the collection and management model against the backdrop of the digital economy. For e-commerce operators, this is both a challenge to traditional business concepts and an important opportunity to promote management upgrades.

In the short term, the new regulations may increase compliance costs for some operators and even expose historical issues. However, in the long run, unified regulatory standards and a transparent tax environment are conducive to creating a fair competition order and promoting the healthy development of the industry.

It is recommended that e-commerce operators proactively adapt to regulatory requirements, integrate compliance management into all aspects of operations, and continuously enhance tax compliance levels by establishing sound internal control systems, improving accounting practices, and strengthening voucher management. Simultaneously, it is recommended that regulatory authorities consider the characteristics of e-commerce operations, providing reasonable transition periods and guidance during enforcement. Through the joint efforts of both tax collectors and taxpayers, a balance can be achieved between protecting tax revenue and promoting the development of new business formats.