Over the past two years, the biggest change in the cross-border e-commerce industry has not only been the increasingly fierce competition among platforms, but also the move toward comprehensive transparency in tax regulation.

Many sellers used to be accustomed to:
Unified management of multiple stores, payment collection by a Hong Kong company, centralized accounting for the operating entity, and pooling of costs.

However, as platform data, bank transaction records, customs declaration information, and tax system data are gradually integrated, many “routine procedures” that were once taken for granted may now become potential risk points.

Recently, in particular, many cross-border sellers have begun to focus on several key issues:

• When there are multiple stores, who is actually responsible for paying taxes?
• If the operations are managed centrally by the operating company, can tax returns be filed centrally?
• What should I do if I can't break down the costs?
• Will past transactions be subject to retroactive review?
• Can Amazon advertising fees be deducted for tax purposes even if there are no domestic invoices?

In fact, the core message conveyed by this policy announcement is very clear:

Cross-border e-commerce is not precluded from operating with multiple entities and multiple stores; rather, it is essential to thoroughly streamline the tax structure, cost allocation, and business processes.

For many sellers, the real problem isn’t high taxes, but rather:
The accounts don't match the actual business transactions.

I. The Most Critical Issue in Cross-Border E-Commerce: Who Is Ultimately Responsible for Paying Taxes?

Many sellers have a misconception:

I believe that since the operating company handles all payments and manages all stores centrally, it should be the operating entity that pays taxes.

But that's not actually the case.

According to the relevant corporate income tax regulations, the entity under whose name a platform store is registered is the legally designated taxpayer.

Simply put:

Who holds the business license for the Amazon store?
That person is responsible for filing the corporate income tax return.

Even if a company operates more than a dozen stores, or a corporate group centrally manages all accounts, each store remains an independent taxpayer.

This is absolutely crucial.

Because during future tax audits, the first thing they will look at is:

Are the entity that owns the store and the taxpayer the same?

For many sellers, the biggest risk isn’t actually failing to file a declaration, but rather:

There is a complete mismatch between the entity actually conducting business and the entity filing tax returns.

For example:

• The store is registered under Company A;
• Use Entity B to receive payments;
• Costs are charged to Company C;
• Team D is in charge of the actual operations.

This structure might have been “overlooked” in the past, but as data becomes more transparent in the future, it will become increasingly difficult to explain.

II. How is corporate income tax paid? Currently, there are two main methods

Currently, there are two main models for corporate income tax on cross-border e-commerce businesses:

Flat-rate taxation and examination-based taxation.

The right approach varies greatly from one company to another.

1. Fixed-rate taxation: Suitable for sellers who have difficulty allocating costs

If a business meets the relevant requirements, it may directly adopt the assessed-tax collection method.

Its most notable feature is:

There is no need for complex cost calculations.

Regarding:

• Sellers who stock inventory;
• Companies with irregular accounting practices in the early stages;
• Many companies are missing cost documents;

It will be relatively simple.

But it needs attention:

Fixed-rate taxation is not a “magic bullet” for low taxes.

In the future, tax authorities will place increasing emphasis on genuine business operations. If a business consistently reports massive revenue but extremely low profits over a long period while continuing to use a simplified assessment model, this may also attract scrutiny.

Therefore, companies must make their selection based on their own business scale and stage of development.

2. Taxation Based on Account Audits: Focus on Cost Allocation

For sellers who do not meet the criteria for assessed taxation or who voluntarily opt for audit-based taxation, the key issue becomes:

How are costs allocated?

Currently, there are two common scenarios in the industry.

The first type:

Individual stores can be accounted for separately.

This one is the simplest.

Aggregate data for each store separately:

• Purchasing costs;
• Advertising costs;
• Warehousing and Logistics;
• Platform commissions;
• Labor costs;

The store owner can then file the report independently.

But the real problem is the second one:

“One company, multiple stores; unified operations.”

Many cross-border companies are actually:

One operations team manages multiple stores.

At this point, it is simply impossible to break down a large portion of the costs on a line-by-line basis.

For example:

• Team salaries;
• Advertising;
• ERP costs;
• Overseas warehouse fees;
• Total operating costs.

In this situation, the more common practice at present is:

The operating entity first consolidates all costs and then allocates them to each store entity using the revenue-sharing method.

Each store then files its income tax return based on the allocated costs.

This is also the standard procedure that an increasing number of cross-border companies are adopting.

But the key point is:

It is essential to provide a complete basis for cost aggregation and allocation.

Otherwise, if a follow-up review is conducted, it could easily be interpreted as:

Artificially inflating profits.

III. What About Existing Business? The existing issues have actually provided some breathing room.

What many sellers are most worried about right now isn't actually the future, but rather:

What should be done about those past non-compliant transactions?

Especially:

• We didn't keep books in the early days;
• The store's overall layout is disorganized;
• Cost invoice missing;
• Unified tax filing for multiple stores;
• Mixing business and personal accounts;

These historical issues are virtually universal across the industry.

However, at the policy level, a certain degree of flexibility has already been built in.

If a business was previously unable to accurately calculate its costs, the tax authorities may, during a subsequent audit, assess taxes based on the prescribed rates.

Currently, the main phases are as follows:

• For business conducted before September 2025, taxable income rates will be determined based on the 2% rate in certain cases;
• For business conducted from October to December 2025, certain cases will be assessed according to the 4% standard.

That means:

For companies with incomplete historical financial records, the approach is not to impose “one-size-fits-all, heavy penalties.”

But the premise is:

Companies are willing to gradually bring their operations into compliance.

In addition, for many sellers operating multiple stores under a single business entity, if the operating entity has previously conducted unified accounting and paid taxes in full, there is currently some room for adjustment—provided that costs can be reasonably allocated based on revenue proportions going forward and there is no overall underpayment of taxes.

Simply put:

What I fear most now isn’t that “things weren’t done properly in the past,” but rather:

I'm not going to start organizing it just yet.

IV. For Export Agents: “Traceability” Will Be a Key Focus After 2025”

Sellers who act as export agents should pay special attention to this.

In the future tax system, questions such as “Who owns the goods?” and “To whom do the profits belong?” will become increasingly important.

In particular, after October 2025, if an export agency cannot provide information on the actual principal, the export value, and relevant traceability documentation, taxes will likely be levied directly based on the assessed value.

The key factor that truly determines the level of the tax burden is, in fact:

Is it possible to prove that the upstream supplier has paid the required taxes?

If you can provide:

• Information on upstream production and sales units;
• Proof of tax payment;
• Agency Agreement;
• Export link information;

As a result, many business operations will be able to pay taxes based solely on agency service fees.

The difference in tax burdens here is actually quite significant.

Therefore, the most crucial factor for the export agency industry in the future is not simply “whether or not there is a contract,” but rather:

Can the business be fully traced?

V. Can Amazon advertising fees and platform fees be deducted even if there are no domestic invoices?

This is the issue that concerns many sellers the most.

Especially on platforms like Amazon, TikTok Shop, and Shopee, a large portion of the fees are actually deducted directly by the overseas platforms.

Many people think that:

Without a domestic invoice, the expense cannot be deducted for tax purposes.

Actually, that's not the case.

Currently, the following are issued by overseas platforms:

• Invoice;
• Receipt;
• List of Platform Fees;
• Backend Settlement Report;

As long as it clearly demonstrates:

• Trading Hours;
• Services Offered;
• The parties to the transaction;
• Amount information;

All of these can be retained as documentation for tax-deductible expenses.

For example:

Amazon advertising fees,
Storage fees,
Commission fees,
Platform service fee,

The expense reports downloaded from the backend are actually all very important.

For many sellers, the biggest risk isn’t that they can’t deduct, but rather:

The data wasn't saved at all.

Reply with [Cross-Border E-Commerce Compliance] to schedule a free one-on-one risk assessment with a financial and tax advisor, who will generate a personalized “2026 Cross-Border E-Commerce Compliance Remediation Plan” just for you.