China plans to crack down on tax evasion in livestreaming industry

The Chinese government plans to crack down on tax evasion in the livestreaming industry and regulate livestreaming platforms, requiring the platforms to strengthen the management of livestraming account registration.

China's State Taxation Administration announced that livestreamers and livestreaming platforms should maintain fair competition. They are not allowed to use fake marketing and self-tipping to help increase traffic, luring customers to buy products and tip. The authority added that livestreaming platforms and service agencies shall perform the obligation of withholding and paying personal income tax in accordance with the regulation, and shall not pass on or evade the obligation of paying personal income tax, and shall not plan or help livestreamers to evade tax.

In the announcement, the State Taxation Administration agreed that livestreaming has played an important role in recent years in promoting flexible employment, but the industry also has several problems, including poor management by livestreaming platforms, irregular commercial marketing behaviour, tax evasion, damaging the industry's healthy development and social fairness and justice.

The authority also said livestreamers and livestreaming platforms will be penalised after violating the regulations. However, the announcement did not tell what the penalty is.

Previously, two Chinese influencers were fined by local tax regulators in Hangzhou due to tax evasion amid the Chinese government's tightened control over livestreaming eCommerce. Tax regulators in Hangzhou said they had discovered the cases through a big data analysis system where both live streamers Zhu Chenhui and Lin Shanshan were suspected of tax evasion.

After investigation, the regulators said Zhu had converted the income worth ¥84.5 million earned through at least six company partnerships from her personal income to the businesses' revenue, to evade taxes worth ¥30.4 million. She was fined ¥65.5 million. On the other hand, Lin used similar measures to evade taxes. The regulators said Lin had converted the income worth ¥42 million gained through at least four companies from her personal income, to the businesses' revenue to evade taxes worth ¥13.1 million. She was fined ¥27.7million.

Another controversial livestreaming incident came up as Li Jiaqi and Viya partnered with L'Oreal to sell facial masks on livestreaming platforms during the 11.11 shopping festival. The products were touted to be the biggest discount of the year during pre-sale events. However, some consumers later discovered the same masks were sold cheaper through L'Oreal's own livestreaming event.

While Li and Viya sold a combined ¥18.9 billion worth of goods on 20 October, both of them announced their suspension of partnership with L'Oreal until the issue was solved. They said they would also compensate consumers if the company did not offer satisfactory solutions within 24 hours.

(Photo courtesy: 123rf)

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