China’s New Tax Reporting Rules for Internet Platforms: A Major Shift in Digital Economy Oversight
China has introduced sweeping new tax reporting regulations for internet platform companies, marking a significant step in the country’s efforts to modernize tax administration and ensure fairness in its rapidly expanding digital economy. The new rules, which took effect in June 2025, require internet platforms to submit detailed, quarterly reports on the income and identity of businesses and workers operating on their platforms. This move is designed to enhance transparency, curb tax evasion, and create a level playing field for all participants in the digital marketplace.
What Are the New Rules and Who Do They Affect?
The regulations, issued under State Council Decree No. 810, apply to a broad range of internet platforms, including e-commerce marketplaces, live-streaming sites, short-video platforms, and any online service that facilitates profit-making transactions. Both domestic and foreign platforms offering services within China are subject to these requirements.
Under the new rules, platform operators must collect and verify the following information for each business and worker generating income through their services:
- Identity details (such as name, identification number, and business registration)
- Income and revenue data for the previous quarter
- Platform domain names and business types
- Unified social credit codes (for businesses)
This information must be submitted to local tax authorities within one month after the end of each quarter. The first reports are due in October 2025, covering the July–September period.
Exemptions and Special Cases
Not all platform workers are subject to these reporting requirements. The rules specifically exempt individuals engaged in public convenience services—such as delivery drivers, transport workers, and housekeepers—if they qualify for tax exemptions or fall outside the scope of tax obligations under current laws. Historical income earned before the regulation’s enactment is also exempt from reporting.
Additionally, platforms are not required to resubmit information that has already been provided through tax withholding declarations or is accessible via government data-sharing mechanisms. This measure is intended to reduce redundant reporting and ease the compliance burden on platform operators.
Why Is China Implementing These Rules?
The rapid growth of China’s digital economy has created new challenges for tax authorities. Online marketplaces, live-streaming, and gig work have enabled millions to earn income in ways that are difficult to track using traditional tax administration methods. This has led to concerns about hidden income, tax evasion, and unfair competition between digital and traditional businesses.
Wang Weiqing, a fiscal policy expert, explains the rationale behind the new rules:
“The new rules are a milestone in the governance of China’s digital economy. They clarify the compliance obligations of platform operators, reduce the room for tax avoidance by vendors and employees of the platform, narrow the tax gap between the real and digital economies, and create a more level playing field for all.”
By requiring platforms to report detailed income data, authorities aim to ensure that all participants in the digital economy pay their fair share of taxes, while also protecting the rights of compliant businesses and workers.
How Do the Rules Compare to International Standards?
China’s new regulations align closely with global efforts to improve tax transparency in the digital sector. The rules are modeled in part on the Organisation for Economic Co-operation and Development (OECD)’s Model Reporting Rules for Digital Platforms, which have been adopted in regions such as the European Union (DAC7), Australia, New Zealand, and the United Kingdom.
However, China’s approach is stricter in several respects:
- Reporting Frequency: China requires quarterly reporting, whereas the OECD model typically calls for annual submissions.
- Scope: The rules apply to a wide range of platforms, including non-resident entities providing services in China.
- Penalties: Non-compliance can result in fines of up to RMB 500,000 (about $70,000) and potential suspension of business operations.
Despite these differences, the core objective remains the same: to enhance transparency, combat tax evasion, and ensure fair taxation in the digital economy.
Impact on Businesses, Workers, and the Platform Economy
Authorities have emphasized that the new rules are not intended to increase the tax burden for the vast majority of businesses and workers. Most small and micro-sized enterprises already benefit from preferential tax policies, and these will remain in place. For example:
- Merchants with monthly sales under 100,000 yuan (about $14,000) are exempt from value-added tax (VAT).
- Platform workers earning less than 120,000 yuan (about $16,700) per year—after deductions—are generally exempt from personal income tax.
According to the State Taxation Administration, more than 90% of internet merchants and workers did not see an increase in tax payments during pilot programs for the new reporting system. However, those who have been underreporting income or engaging in tax evasion will now face stricter oversight and may see their tax liabilities “return to normal levels.”
Compliance and Data Security
To facilitate compliance, tax authorities are required to provide secure, user-friendly reporting channels and offer technical guidance and policy consultations to platform operators. Platforms must verify the authenticity, accuracy, and completeness of the information they submit, but they are protected from penalties if they fulfill their verification duties and still receive incorrect data from users.
Privacy protection is a key component of the new regulations. Internet platform companies must securely store tax-related information, and tax agencies are obligated to maintain confidentiality and establish robust safeguards to manage the data in accordance with the law.
Challenges and Industry Reactions
The decentralized nature of platform work in China—where many gig workers are registered on multiple platforms and have complex employment relationships—poses significant challenges for tax information collection and reporting. Industry experts note that the new rules will require platforms to invest in upgraded compliance systems and data management processes.
Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, comments on the practical implications:
“Easing reporting requirements is expected to streamline operational processes for platforms, reduce their compliance burdens, and enhance efficiency. A more adaptable reporting regime may also help encourage flexible employment among low-income groups by supporting their ability to earn a reasonable income.”
Some analysts believe that the increased transparency could reduce the pricing advantage of certain online merchants who previously underreported income, potentially leading to more stable and fair competition in the digital marketplace.
Penalties for Non-Compliance
Platforms that fail to comply with the new reporting requirements face significant penalties. Minor breaches can result in fines ranging from RMB 20,000 to RMB 100,000, while serious violations may lead to fines of up to RMB 500,000 and even suspension of business operations. Tax authority personnel who commit illegal acts in managing these reports will also be held accountable.
Broader Implications for China’s Digital Economy
The introduction of these tax reporting rules reflects China’s broader strategy to regulate and support the healthy development of its digital economy. As online platforms become an increasingly important part of the country’s gross domestic product, ensuring fair taxation and reducing opportunities for tax evasion are seen as essential for long-term economic stability.
The rules also demonstrate China’s willingness to align with international best practices while adapting them to local conditions. By implementing stricter reporting requirements and robust data security measures, China aims to balance the need for effective tax administration with the protection of taxpayer rights and the promotion of innovation in the digital sector.
In Summary
- China’s new tax reporting rules for internet platforms require quarterly submission of detailed income and identity data for businesses and workers.
- The regulations apply to a wide range of platforms, including e-commerce, live-streaming, and short-video sites, and cover both domestic and foreign operators.
- Exemptions exist for certain convenience service workers and for income already reported or accessible via government data-sharing.
- The rules are designed to enhance transparency, combat tax evasion, and create a fairer digital economy without increasing the tax burden for most compliant businesses and workers.
- Penalties for non-compliance are significant, with fines up to RMB 500,000 and possible business suspension.
- China’s approach aligns with global trends but is stricter in reporting frequency and enforcement.
- Privacy and data security are emphasized, with clear obligations for both platforms and tax authorities.
- The new rules are expected to modernize tax administration, reduce unfair competition, and support the sustainable growth of China’s digital economy.
