On December 20, the State Administration of Taxation in China introduced a draft for public feedback on the “Provisions on the Submission of Tax-related Information of Internet Platform Enterprises.” This new set of regulations aims to simplify tax reporting for online businesses, including E-Commerce platforms, live streamers, and gig economy workers. But how will these changes impact platform operators, and what does this mean for the future of the platform economy?
No Change for Most Compliant Businesses
The good news for many platform businesses is that these new rules won’t increase their tax burdens. The regulations focus primarily on simplifying the tax information submission process. While platform operators will need to submit tax-related data regularly, their overall tax obligations will remain stable.
Small businesses and micro-enterprises—who make up a large portion of the platform economy—will continue to benefit from tax exemptions and deductions. For example:
- Merchants with monthly sales up to 100,000 yuan will be eligible for VAT exemptions.
- Employees earning less than 120,000 yuan annually will pay little to no individual income tax after deductions like children’s education or housing fund contributions.
Even for platform operators with higher earnings—such as those earning over 1.2 million yuan annually—tax breaks like halved individual income tax rates will keep their tax burdens manageable.
Keeping Tax Burdens Low for the Majority
According to the government’s pilot programs in cities like Tianjin and Jiangxi, more than 90% of operators have reported no change in their tax obligations. This suggests that most businesses, particularly those involved in logistics, delivery, and similar services, will not be affected by the new regulations.
Lian Qifeng, Director of the Department of Tax Collection and Management at the State Administration of Taxation, emphasized that the income information of workers in industries like distribution and housekeeping will not be reported, which means their tax responsibilities will remain unchanged.
Tackling Tax Evasion and Promoting Fairness
While most businesses won’t see major changes, the government is making it easier to spot and address tax evasion. The regulations specifically target operators who have been avoiding taxes through false declarations or under reporting income. This small group of non-compliant businesses will face higher tax burdens in line with the law.
This shift ensures that all businesses play by the same rules. By cracking down on tax evasion, the government aims to create a level playing field where compliant businesses no longer face unfair competition from those who break the law.
What This Means for the Future of the Platform Economy
The new provisions are part of the government’s broader strategy to build a fair, transparent, and sustainable platform economy. These regulations strike a careful balance: supporting small businesses and workers while promoting compliance.
For compliant businesses, these changes should provide more stability and predictability in their tax obligations. By addressing non-compliance, the government hopes to improve the overall business environment, which could foster more trust and investment in China’s growing platform economy.
In conclusion, the new tax provisions represent a positive step forward for China’s platform economy. The focus on keeping taxes low for small businesses and curbing tax evasion should help create a fairer and more organized market. With proper implementation, these changes could ensure that the platform economy thrives in a more regulated, sustainable, and transparent environment.
For most law-abiding platform operators, these provisions will bring peace of mind and help build a stronger, more fair digital marketplace
You may also be interested in China’s adoption of the new Value-Added Tax law.
