Xiao Wang, a live-streaming e-commerce host in Hangzhou, was still worrying about July’s GMV just yesterday.

As soon as I opened my eyes today, my phone was flooded with a news story: On July 10, the State Taxation Administration announced that tax authorities in Shandong, Zhejiang, Sichuan, and other regions had simultaneously exposed seven cases of tax evasion involving internet celebrities and online stores.

Four online streamers were ordered to pay back taxes, late payment penalties, and fines totaling more than 13.3 million yuan.

One of them, who ran an online store, concealed 207 million yuan in income over two years, underpaying 5.4472 million yuan in personal income tax, value-added tax, and other taxes. In the end, he attempted to “slip away” by canceling his business registration.

The most common comment in the comments section is: “Have the e-commerce tax regulations gotten stricter again?”

The answer is: It’s not that the tax has changed; it’s that the “algorithm” has changed.

Many people think that some kind of “new e-commerce tax” was introduced in 2026.

In fact, no new tax category has been created specifically for e-commerce.

The VAT, corporate income tax, and personal income tax on your sales are essentially the same as those for brick-and-mortar stores.

The only thing that has changed is the regulatory approach—and it represents a qualitative shift from “tax administration based on receipts” to “tax administration based on data.”

On January 1, 2026, the *Value-Added Tax Law of the People’s Republic of China* and its Implementing Regulations officially took effect.

Starting on the same day, the corresponding regulations governing the registration and management of general taxpayers were also tightened.

One key change is that if a live-streamer or seller maintains their status as a small-scale taxpayer in violation of regulations over an extended period—by concealing income or splitting business entities, for example—the tax authorities, upon verifying such violations, have the right to require them to calculate and pay VAT at the rates applicable to general taxpayers, retroactive to the period in which the tax liability arose.

The tax rate for sales of 13% is significantly higher than the small-scale business tax rate for 1%–3%.

A late payment penalty of 0.05 percent per day will be assessed, and the fine may be up to five times the amount of unpaid or underpaid taxes.

This isn't a matter of making up for past payments; it's about directly returning the profits from previous years.

Even earlier, in June 2025, the “Regulations on the Reporting of Tax-Related Information by Internet Platform Companies” had already taken effect.

The significance of this regulation lies in the fact that internet platforms are required to report data—including transaction records, commissions, refunds, tips, and promotional fees—for their merchants to the tax authorities on a quarterly basis.

In other words, the tax authorities already have a “true set of books.”

According to data from the Ministry of Commerce, online retail sales reached 15.97 trillion yuan in 2025, an increase of 8.6% year-over-year; transaction volume for live-streaming e-commerce grew by 11.3% compared to the previous year.

The larger the market, the more essential it is to have effective regulation.

No matter how much you try to close deals in your private domain, accept payments through personal cards, or split them across multiple small stores, as soon as the platform’s data is cross-referenced, the discrepancies will immediately become apparent.

A spokesperson for the State Taxation Administration put it bluntly: Any attempt to “exploit loopholes” to evade taxes will be subject to legal penalties.

Since the beginning of this year, tax authorities have publicly exposed several high-profile cases of tax evasion by internet celebrities and online stores, thereby establishing a routine deterrent.

For workers in the platform economy, the opportunities to evade taxes by exploiting information asymmetries are rapidly shrinking.

If you’re facing a similar challenge—your platform sales are growing, but you’re unsure how to file your taxes or which tax status to choose—feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671). We’ll help you identify the compliance solution that best fits your e-commerce business.

These seven cases may seem complicated, but when broken down, they essentially follow three familiar patterns.

The first type is called “high traffic, low reporting.”

Xu Jingwan, a live-streamer with 6 million followers, has reported zero tax and fee figures for her two online stores—which specialize in e-commerce—since their inception.

Guo Xiaofeng, who has 2.4 million followers, has recorded cumulative sales of one million orders through his account’s shop window, yet his total tax payments over the past four years amounted to only 13,500 yuan.

Chen Xu, who has over 1 million followers, reported zero income on his 2022 personal income tax return and paid only a few hundred yuan in taxes for 2023.

Their livestreams all have a decent following, but their reported taxable income is absurdly low.

The second method is called “changing the nature of income.”

Some live-streamers register as self-employed individuals or sole proprietorships and conceal income—such as revenue from live-streamed product sales, paid content, and fan tips—that should be accurately reported, using methods such as off-the-books transactions, “shadow contracts,” and false reporting.

This kind of tactic might have slipped by in the past, but now that the platform pulls up the data, the revenue curve and the reported curve don’t match, and the system flags it in red right away.

Why would anyone do that?

Since the top marginal tax rate on labor income is 45%, the tax burden on business income or income subject to assessed taxation may be significantly lower.

However, in 2022, the State Taxation Administration and two other departments explicitly required that enterprises and individual studios established by live-streaming content creators must maintain accounting records in accordance with regulations and, in principle, calculate and pay taxes using the audited accounting method.

If you're hoping to use the fixed-rate taxation method for sole proprietorships to reduce the tax burden on 45% to just a few percentage points, that approach is no longer viable.

The third type, which is the most egregious, is called “fleeing-style deregistration.”

Ren Wei, the actual controller of the Nai Pao Trading Department in the Liaocheng Development Zone, Shandong Province, concealed business income totaling 207 million yuan between 2023 and 2024, resulting in underpayment of taxes—including personal income tax and value-added tax—amounting to 5.4472 million yuan.

After verifying the facts, he chose to deregister the business, thinking that once the company was gone, he would no longer have to pay taxes.

And the result?

The tax authorities will reinstate the registration in accordance with the law, collect back taxes, and hold the actual controllers of the sole proprietorships jointly and severally liable.

Experts make it clear: The deregistration of a business merely signifies the termination of its business operations; legal liabilities and tax obligations arising during the period of its existence will not be automatically eliminated by the deregistration of the entity.

If false materials are submitted during the deregistration process or if fraudulent means are used to conceal material facts, the registration authority may also revoke the deregistration in accordance with the law.

Article 56 of the Civil Code of the People’s Republic of China also stipulates that the debts of an individually owned business shall be settled with the individual’s personal property if the business is operated by an individual, and with the family’s property if the business is operated by a family.

In other words, even if the business entity ceases to exist, the actual controllers and operators are still required to use their personal assets to cover any shortfalls.

Attempting to evade taxes by dissolving a company essentially transforms the company’s limited liability into an individual’s unlimited liability.

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After reviewing these case studies, if you’re in the e-commerce business, you should immediately assess your own operations against them.

Category 1: Businesses whose annual sales have exceeded 5 million but are still “holding on” under the small-scale taxpayer status.

The criterion for being designated as a general VAT taxpayer is annual taxable sales exceeding 5 million yuan.

If you exceed this amount but still force the business to be split into multiple entities, conceal income, and maintain a small-scale operation, the risks are greatest.

Under the new rules taking effect in 2026, if a violation is confirmed, back taxes will be calculated starting from 13%, plus late payment penalties and fines—which could wipe out several years’ worth of profits overnight.

Category 2: Those who redirect platform traffic to their private channels and accept payments via their personal WeChat or Alipay accounts.

Many sellers feel that platform commission rates are high and that making sales through their own private channels can help them save on transaction fees.

However, it’s not that transactions in private domains can’t exist; rather, you must report this portion of your income to the tax authorities as well.

If revenue from private domains isn’t recorded, the discrepancy between the platform’s GMV and the reported revenue will be a glaring data anomaly.

Category 3: Complex schemes involving multiple parties, related-party transactions, and profit shifting.

For example, Company A sells the goods, Company B collects the payments, and Company C issues the invoices, and then profits are transferred to entities in low-tax jurisdictions through transfer pricing.

This type of structure is not impossible to implement, but it must be backed by genuine business substance, a complete contract workflow, cash flow, invoice flow, and logistics.

If you cannot reconcile the four cash flows, your business will become a prime target for tax audits.

Whenever I see news like this, there are always people in the comments section who say, “Compliance costs are too high; small sellers can’t make ends meet.”

But look at it this way: if those streamers who were fined 13.3 million had complied with the regulations sooner, would they have had to pay that much?

Late payment penalties and fines often end up costing much more than the regular tax liability.

Furthermore, the government has not rescinded its preferential policies for small-scale sellers.

Currently, small-scale taxpayers with monthly sales of less than 150,000 yuan or quarterly sales of less than 450,000 yuan are still eligible for the VAT exemption policy; those exceeding the threshold are generally subject to a preferential tax rate of 1%.

Small and micro enterprises and self-employed individuals are also eligible for corresponding income tax reductions and exemptions.

So compliance doesn’t mean paying more taxes; it means paying what you owe and saving where you can.

When it comes to e-commerce compliance in 2026, there are really just three key areas.

First, understand your tax status.

Are you a small-scale taxpayer or a general taxpayer? Are you taxed based on audited accounts or a fixed-rate assessment? Is your income classified as compensation for services or business income?

Depending on your status, the tax rates and filing methods vary significantly.

If you make the wrong choice at the beginning, everything you do afterward will be wrong.

Second, establish accurate financial records.

Please stop using your personal card to receive payments.

Platform accounts, business accounts, invoices, contracts, and shipping documents should be kept as consistent as possible.

In particular, items that are “easy to confuse”—such as refunds, commissions, platform subsidies, and sample costs—must be recorded separately.

Third, have a professional conduct regular tax reviews.

Many sellers don’t intentionally evade taxes; they simply don’t know which actions cross the line.

For example, transferring funds from a company account to a personal card without recording the transaction, including personal expense receipts in company expenses, or inflating costs through fake transactions—these practices are quite common in day-to-day operations, but they’re sure to be flagged during an audit.

Conducting a quarterly tax health check is a hundred times more reliable than rushing to catch up on bookkeeping at the end of the year.

Some sellers are also concerned that compliance will drive up costs, making it difficult for them to compete with rivals who continue to operate “off the books.”

However, this line of thinking overlooks one key point: under increasingly stringent regulations, non-compliant competitors are not your long-term rivals, but rather potential sources of risk that could be eliminated at any moment.

If you get your finances in order ahead of time, you’ll actually gain an advantage when it comes to fundraising, bidding on contracts, and brand partnerships.

More importantly, we need to proactively integrate with the platform's data.

Starting in 2026, the platform will submit transaction data to the tax authorities on a quarterly basis.

The data reported by sellers themselves must generally match the data submitted by the platform.

If the discrepancy is too large, the system will issue a risk alert before a tax audit even takes place.

Early detection and early correction are the most cost-effective approach to risk management.

Compliance isn't about making you pay more; it's about helping you sleep more soundly.

In the second half of 2026, getting your finances in order is more important than any promotional campaign.

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Compliance isn't a one-size-fits-all approach; sellers at different stages have different priorities.

If you’re a small seller just starting out with monthly sales of less than 150,000 yuan, the first thing you should do is standardize your invoicing and payment collection processes.

It’s acceptable to use a personal card to receive small, sporadic payments, but you must record each transaction individually and ensure nothing is omitted when filing your year-end tax return.

If your annual sales are between 1 million and 5 million, we recommend that you upgrade to general taxpayer status or hire a full-time accountant as soon as possible.

At this stage, it’s most common to see a mismatch where “revenue has increased, but the finances are still managed like a family-run business.”

VAT filing, input tax credits, and cost allocation—each of these requires professional handling.

If you are a top-tier live-streamer or a major seller with annual sales exceeding 10 million, you must develop a comprehensive tax structure.

How should the nature of the income be determined? How should responsibilities be divided among multiple companies? Should profits be retained domestically or overseas? Are there any transfer pricing risks associated with related-party transactions?

These issues cannot be automatically resolved by financial software; they require a comprehensive assessment that takes into account the business model, equity structure, and future financing plans.

The revelation on July 10 is not the end, but a sign.

Tax regulation of the platform economy has entered a new phase of “data-driven tax administration.”

For sellers who operate in compliance with the law, this is a good thing—the era of “bad money driving out good” is coming to an end.

For those who are still clinging to false hope, this is their last chance.

In the second half of 2026, compliance will no longer be an option—it will be a necessity.

If you’re also facing similar concerns—wondering whether your private domain payments or multi-entity structure might be crossing the line—feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671) for a comprehensive e-commerce tax review.

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