Owners of Douyin and Taobao stores have recently been asking the same question: Has the fixed-rate tax system been abolished, and will audits be required from now on? The answer isn’t that clear-cut, but regulations have indeed tightened in 2026, and e-commerce businesses are the main target.

Today, we’ll thoroughly explain the concepts of ”tax audits” and ”tax assessments” so you’ll understand exactly how to pay your taxes and which tax breaks you’re still eligible for.

01

Policy Stance: It’s Not a Complete Abolition, but a Tightening of E-commerce Regulations

Online rumors claiming that ”the fixed-rate tax collection method for e-commerce will be completely abolished nationwide in 2026” are inaccurate. The official stance is: online commerce, live-streamed product sales, and other related activities...For high-risk industries, local authorities will no longer approve new applications for fixed-amount tax assessments.; Existing self-employed individuals subject to fixed-rate taxation will be transitioned to book-based taxation in batches. A small number of offline, micro-scale retail shops serving the public may retain their fixed-rate status, while e-commerce businesses will generally be subject to book-based taxation.

As a result, in many areas, newly registered individual e-commerce businesses are not granted a fixed-rate tax assessment and are instead required to undergo an audit-based tax assessment.

If you’re facing a similar situation—as a sole proprietor in e-commerce who’s been subject to a mandatory audit and tax assessment but isn’t sure how to keep books or claim cost deductions—feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671). We’ll help you develop a comprehensive compliance solution covering the entire process.

02

How Is Tax Calculated Under the Audit-Based Taxation System?

Under the audit-based taxation method, taxes are calculated based on actual profits: Profit = Total Revenue − Qualified Deductible Costs. These include purchases, platform advertising, shipping and warehousing, labor, rent,A valid VAT invoice must be provided in order to claim a tax credit.The

Expenses without invoices cannot be deducted as costs. For example, if you generate 1 million in sales but spend 600,000 on inventory without invoices, the tax authorities will only recognize the 1 million in revenue, resulting in you paying more tax than necessary. This is why you should always request invoices for purchases—even if it costs a little more, it’s more cost-effective in the long run.

Individual business income is subject to a progressive tax rate ranging from 5% to 35%. Good news: From 2026 to 2027, the portion of annual taxable income not exceeding 1 million will be subject to an additional 50% reduction on top of the current preferential rate (Announcement No. 12 of 2026 issued by the Ministry of Finance and the State Taxation Administration), effective through the end of 2027.

03

What other discounts are available?

Small-scale businesses with quarterly revenue ≤300,000 (standard invoices) are exempt from VAT; sole proprietors with annual revenue ≤1.2 million may apply for the ”double exemption” (full exemption from VAT and individual income tax); micro and small enterprises with annual profits ≤3 million are subject to a corporate income tax rate of 5%.

Cross-border e-commerce companies operating under the 9610/1210 Comprehensive Pilot Zone model, with individual shipments valued at ≤5,000 yuan, benefit from a 4% taxable income rate combined with preferential policies for small and micro enterprises, resulting in an extremely low overall tax burden. However, business operations must be genuine, and documentation such as order, logistics, and payment records must be retained.

04

Three Red Lines You Must Never Cross

First.Receiving Public Funds in a Personal AccountThe most serious issue—data from platforms, payment services, and banks has been integrated, and payments received via personal bank cards haven’t been reported; an investigation will inevitably uncover them.

Second, it’s a misconception that you don’t have to pay taxes if you don’t issue an invoice—sales records are clearly documented in the platform’s backend, and just because a customer doesn’t request an invoice doesn’t mean the tax authorities can’t track it.

Third, in addition to facing penalties from the platform, fake orders also pose tax risks: when fake orders are mixed in with genuine sales, it becomes impossible to distinguish between them. By 2026, the “four-stream integration” (orders, funds, logistics, and invoices) will enable cross-checking, and any discrepancies will trigger immediate alerts.

If you’re facing a similar situation—and want to clarify the tax compliance process for sole proprietorships or limited liability companies—feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671), and we’ll help you develop a comprehensive, end-to-end compliance solution.

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