New tax rules for internet platforms

The State Council, China's Cabinet, unveiled a new regulation mandating internet platform companies to regularly report tax-related information of businesses and workers operating on their platforms, in a move to ensure a level playing field for the development of the digital economy.

According to the State Council, the new rules, comprising 14 articles, require platform operators to submit identity and income information of both businesses and workers using their platforms to local tax authorities on a quarterly basis.

The regulation seeks to improve the efficiency of tax services and administration, safeguard the legitimate rights of taxpayers and ensure a level playing field in the digital economy.

Notably, the rules also clarify exemptions. Platform workers engaged in public convenience services such as delivery, transport and housekeeping — who either qualify for tax exemptions or fall outside the scope of tax obligations — are not required to have their income reported.

The Ministry of Justice and the State Taxation Administration emphasized that the "new tax reporting rules for internet platform companies will not increase the tax burden for the vast majority of businesses and workers operating on these platforms."

For most operators and workers on such platforms, particularly those who are compliant with existing tax laws, their tax payments will remain the same, they said.

They added that small and micro-sized businesses will continue to benefit from preferential tax policies. Merchants with monthly sales under 100,000 yuan ($13,933) are eligible for a value-added tax exemption and platform workers earning less than 120,000 yuan a year — after applying deductions — are generally exempt from personal income tax, they added.

To reduce the compliance burden, the rules said that internet platforms are not obligated to resubmit tax information that has already been provided through withholding declarations or can be obtained via government data-sharing mechanisms. Tax authorities are required to offer secure and efficient reporting channels, easy-to-use data interfaces and timely policy consultations.

Privacy protection has also been underscored. Internet platform firms must securely store tax-related information of platform users, while tax agencies are obligated to maintain confidentiality and establish safeguards to manage the data in accordance with law.