Editor's Note: In recent years, live streaming e-commerce, as a vital component of the digital economy, has experienced rapid development. Concurrently, its tax compliance issues have gradually become a key focus of regulatory attention. To meet the tax collection and management needs of new business models, the State Taxation Administration and other departments have introduced policies such as the "Regulations on the Reporting of Tax-Related Information by Internet Platform Enterprises" (hereinafter referred to as the "Regulations"), marking a new stage of precise and transparent tax supervision driven by data. This article analyzes tax risks under different types of live streaming models in light of the new regulations and proposes systematic compliance recommendations to help relevant entities adapt to changes in the regulatory environment.
I. Changes in the Regulatory Environment: Tax Information Reporting Drives Upgrade in Collection and Management Models
Recently, tax authorities have again exposed six typical cases of tax evasion by influencers and online stores, involving various illegal methods such as concealing income and false declarations. With the successive issuance of the "Regulations" and supporting documents, relevant practitioners urgently need to pay attention to the compliance impacts brought about by these policy changes. The core of the "Regulations" lies in clarifying the tax information reporting obligations of platform enterprises, effectively breaking the previous "information barriers" between tax authorities and taxpayers, and gradually building a new pattern of tax collection and management characterized by "data sharing and multi-party collaboration." Its specific impacts are mainly reflected in the following three aspects:
1.Comprehensive Regulatory Scope
The "Regulations" cover various platforms including online merchandise sales, live streaming marketing, and social e-commerce, even extending to emerging forms such as mini-programs and quick apps, ensuring no blind spots in supervision.
2.Transparent Data Reporting
Platforms are required to regularly report to tax authorities the identity information and detailed income data of operators on the platform (including online stores and streamers). It is noteworthy that platforms cannot unilaterally exclude income data generated from "click farming" and must report based on the actual amounts incurred. Furthermore, for non-monetary income such as tips and virtual gifts received by live streamers, the time when these reach the streamer's platform account is explicitly defined as the point of income recognition. Simultaneously, when platforms report tax-related information of live streamers, they must also report the identity information of the service agencies the streamers are associated with, meaning MCN agencies are also brought into the regulatory purview.
3.Substantialization of Platform Responsibility
Platforms are transformed from mere information intermediaries into key collaborators within the tax collection and management system, bearing responsibility for the authenticity and accuracy of the reported information. This change compels platforms to strengthen the review of the qualifications and business authenticity of operators on their platforms.
Overall, the implementation of the new regulations makes the operational data of live streaming e-commerce increasingly transparent to tax authorities. Traditional non-compliant behaviors such as concealing income or altering the nature of income will face higher tax risks.
II. Varying Tax Risks for Relevant Entities Under Different Live Streaming Models
In the new regulatory environment, different types of live streaming models face distinct tax risks.
(A) Store Live Sales: Authenticity of Income Data Becomes the Core Risk
Store live sales are typically organized by the product seller (the brand or the store itself) and essentially represent the digitization of sales activities. Their tax risks mainly focus on the consistency and authenticity of income data:
1.Risk of Concealing Sales Income
In practice, some online stores have concealed income through methods like receiving payments into personal accounts, off-the-books circulation, and abusing preferential policies for small-scale taxpayers. However, the new regulations require platforms to comprehensively report sales income data. Tax authorities can automatically compare the data reported by platforms with the income declared by the business entities, as well as the transaction records of corporate and personal bank accounts. Any significant discrepancies found will directly trigger tax audits.
2.Tax Treatment Risk for "Click Farming" Income
The "Regulations" explicitly require platforms to report gross income, including that from click farming. If the income declared by a business entity is significantly lower than the data reported by the platform, and it cannot provide sufficient evidence (such as complete fund records, proof of abnormal transactions, etc.) to demonstrate that these are false transactions, the tax authorities may treat it as actual sales income, demanding back taxes, late payment penalties, and potentially characterizing it as tax evasion with corresponding fines.
(B) Entertainment Live Streaming (Tip-based): Prominent Disputes Over Income Nature and Tax Point
Entertainment live streaming, which relies on content like talent performances and interactive chats to attract user tips, faces tax risks primarily related to the determination of income nature and the confirmation of the tax point:
1.Risk of Dispute Over Income Nature
There is practical controversy over whether tip income should be classified as "labor remuneration" or "business income." The new regulations require platforms to simultaneously report the information of the MCN agencies associated with the streamers, helping tax authorities judge the substance of the business more clearly. If a streamer is merely attached to a platform or a specific agency for performances, lacking an independent business entity, team, and cost investments, their income might be "pierced" and recognized as labor remuneration, even if they have set up a personal studio.
2.Risk Related to Tax Point for Non-Monetary Income
Platforms report income based on the "receipt principle," meaning once virtual gifts enter the streamer's platform account, they must be fully reported, regardless of whether they are withdrawn. However, in individual income tax collection and management, platforms often withhold taxes at the time of actual withdrawal based on the "withdrawal principle." Although the rules are coordinated through a mechanism where "platform withholding exempts duplicate reporting," streamers still need to clarify that the tax obligation substantially arises when the income "arrives" in the account. If the platform does not withhold taxes, or if the streamer needs to file an annual final settlement, they must fully declare all income that has reached their account; otherwise, they risk facing back taxes, late payment penalties, and fines.
(C) Personal Live Sales (Promotional Streamers): Concentrated and Complex Risks
Personal live sales mainly refer to independent streamers promoting products for multiple brands and receiving commissions. This area is a "high-incidence zone" for tax risks, with main risks including:
1.Risk of Converting Income Nature
Some streamers establish entities like individually-owned businesses or sole proprietorships to convert what should be personal "labor remuneration income" into "business income" for declaration, aiming to reduce tax burden. Under the new regulations, the entity information and income data reported by platforms enable tax authorities to identify all associated entities under the streamer's name. If "sham individually-owned businesses" lacking business substance are discovered, the related actions may be characterized as tax evasion.
2.Risk of Improper Application of Assessed Collection
The original intent of pre-assessment collection policies was to simplify administration and reduce compliance costs. However, some streamers exploit assessed tax rates in low-tax areas for policy arbitrage. In March 2022, a joint opinion issued by three state departments explicitly stated: "Enterprises and personal studios established by online live streamers should set up account books according to the law and, in principle, use the audit-based collection method for calculating income tax." This implies that the path of pre-assessment collection may no longer be feasible for the online live streaming industry. Under the new regulations, platform information reporting makes entities that improperly apply assessed collection easily identifiable, facing risks of being switched to audit-based collection and having taxes retrospectively recovered, with severe cases potentially being identified as tax evasion.
3.Risk of Non-standard Recording of Costs and Expenses
Under the audit-based collection method, non-standard recording of costs and expenses becomes another high-risk area. According to the Individual Income Tax Law and its implementation regulations, the following expenditures are explicitly non-deductible before tax for business income: personal consumption expenditures of the business owner and their family, other expenditures unrelated to obtaining production and business income, and salary expenditures paid to the business owner themselves. In practice, streamers frequently fabricate costs, such as reimbursing personal purchases of high-end clothing, luxury car maintenance, luxury goods, family rent, and property management fees as "business costs." Simultaneously, many purchases (e.g., samples, clothing) cannot obtain invoices or use non-compliant vouchers for bookkeeping, leading to costs not being recognized by tax authorities. Against the backdrop of continuously upgrading tax supervision methods, tax authorities, relying on the Golden Tax System, have strengthened the comparative analysis of declared information. If the cost and expense rate declared by an individually-owned business is abnormally high, significantly differing from industry norms or reasonable levels calculated by the system using external data like invoice information and bank transaction records, it will automatically trigger warnings. After prompts, reminders, interviews, and guidance, tax authorities will initiate tax inspections and make tax adjustments for those who refuse to rectify, increasing the taxable income accordingly.
III. Systematic Compliance Recommendations
Facing the entirely new regulatory environment, live streaming e-commerce practitioners need to build a forward-looking and systematic compliance system.
(A) Restructure Business Processes and Internal Controls
Ensure the integration of five flows: business flow, contract flow, fund flow, invoice flow, and platform data flow. Specifically: prudently select and standardize the use of business entities based on actual business scale, strictly use corporate bank accounts for receiving payments, and sign commercial contracts with clear rights, responsibilities, and reflecting the substance of the business.
(B) Optimize Accounting and Tax Declaration
Establish a regular income verification mechanism to cross-check book income, tax declaration data, platform reports, and bank transaction records, ensuring data consistency. For special transactions like "click farming," set up auxiliary account books for clear recording and make adjustments during declaration in accordance with the law. Simultaneously, strictly distinguish business expenditures from personal consumption, ensuring cost recordings are genuine, legal, and supported by complete vouchers.
(C) Improve Voucher Management and Archiving Systems
Establish an electronic archive covering the entire process of contracts, logistics, funds, and settlements. Closely monitor policy developments and proactively seek support from professional consultants when encountering complex tax issues to ensure stable and long-term development in the new regulatory environment with clearer rules.
IV. Key Defense Points for Online Stores and Influencers Facing Tax Audits
(A) Proactive Communication with Tax Authorities Regarding Income Nature
The distinction between business income and labor remuneration income is not explicitly defined in tax law. In practice, judging solely based on the nature of the cooperative relationship between the streamer and the live streaming company can be biased. We believe the determination should be based on the economic substance of whether the streamer is providing labor services or engaging in business operations. Accordingly, online streamers can argue that their income constitutes business income (existence of a business entity, risk-bearing, independent operation) by presenting evidence from business registration, cost and expense vouchers (equipment, venue, assistant salaries, procurement, travel, etc.), contracts signed with platforms/MCNs (focusing on rights and obligations clauses, risk assumption, settlement methods), business operation models (independent product selection, content creation, traffic acquisition methods), and independent financial accounting records. This can help reduce the risk of their income being pierced through and classified as labor remuneration.
(B) Post-Investigation Tax Calculation Method: Strive for Application of Assessed Collection
As mentioned earlier, assessed collection can be divided into pre-assessment and post-assessment. Post-assessment refers to the situation where, after a taxpayer adopts the audit-based collection method, the tax authority discovers during an inspection that one of the circumstances from (2) to (6) in the table below exists, and the tax authority then applies assessed collection to determine the tax payable, thereby ensuring tax collection to the greatest extent possible. For streamers under investigation, if their income nature is determined to be business income, although their eligibility for pre-assessment is negated, if circumstances exist such as failure to set up account books when required, or setting up account books but having chaotic accounts, or incomplete cost data, income vouchers, or expense vouchers, they can still argue that the tax authority should assess their income according to the "Tax Collection and Administration Law," to avoid bearing a heavier economic burden.
Circumstances Allowing Tax Authority Assessment:
(1) Where account books are not required to be set up according to laws and administrative regulations.
(2) Where account books should be set up according to laws and administrative regulations but are not set up.
(3) Where account books are destroyed without authorization or tax materials are refused to be provided.
(4) Where account books are set up, but the accounts are chaotic, or cost data, income vouchers, expense vouchers are incomplete, making auditing difficult.
(5) Where a tax obligation occurs, but the taxpayer fails to file a tax declaration within the prescribed time limit, and still fails to declare after the tax authority orders a declaration within a time limit.
(6) Where the taxpayer's declared tax calculation basis is obviously low without justifiable reason.
(C) Taxes Exceeding the Recovery Period Should Not Be Recovered
According to the "Official Reply of the State Taxation Administration on the Recovery Period for Unreported Tax Payments" (Guo Shui Han [2009] No. 326), the situation where a taxpayer fails to file a tax declaration resulting in non-payment or underpayment of tax payable, as stipulated in the second paragraph of Article 64 of the Tax Collection and Administration Law, does not constitute tax evasion, refusal to pay tax, or tax fraud. Its recovery period, following the spirit of Article 52 of the Tax Collection and Administration Law, is generally three years, and can be extended to five years under special circumstances. It can thus be concluded that if an online streamer falls under the circumstances of the second paragraph of Article 64 but is not involved in tax evasion, refusal to pay, fraud, or tax arrears, the tax authority's recovery of taxes is limited by a maximum five-year recovery period. We believe that if an online streamer has items that should have been declared but were not, and this is discovered after more than five years, and there are no acts of tax evasion, refusal to pay, fraud, or arrears, even if it results in non-payment or underpayment of taxes, the tax authority should no longer recover the taxes.
V. Conclusion
The implementation of the "Regulations on the Reporting of Tax-Related Information by Internet Platform Enterprises" marks the end of an era of tax planning relying on information asymmetry and opens a stage of high-quality development centered on authenticity, transparency, and standardization. For all practitioners, proactively adapting to regulatory requirements and internalizing tax compliance as a core management system is no longer an option but an inevitable choice. Only in this way can they operate steadily and go far in a fairer and more transparent market environment, achieving sustainable and healthy development.