In 2018, a video of her performing a gesture dance in a parking lot earned her 12 million new followers overnight, making her one of Douyin’s first-generation internet celebrities.

With 6 million followers, consistently high viewership in their live streams, products priced at hundreds of yuan each, and sales of hundreds of units per item—a live-streaming host like this should, in theory, be raking in a fortune.

But the tax authorities’ findings regarding her tax filings came as a huge surprise: the two online stores run by Wen Wan (real name Xu Jingwan), who was responsible for promoting products,Since its establishment, all tax and fee filing data have been zero.The

An online store with zero reported revenue, paired with a livestreaming channel boasting 6 million followers—this “hidden accounting” scheme was ultimately torn to shreds by tax big data.

In December 2025, the Third Audit Bureau of the Hangzhou Municipal Taxation Bureau of the State Taxation Administration took action against Wen Wan in accordance with the law:Recovery of taxes and fees, plus late payment penalties and fines, totaling 6,319,600 yuanThe

From overnight fame to overnight infamy—what exactly did she do? And how did the tax authorities uncover it? Today’s article breaks down this story in detail.

I. Incident: The “Hidden Accounts” of the First Generation of Internet Celebrities”

Step 1: Data Comparison—Initial Suspicious Findings Emerge

Through big data analysis, tax authorities discovered that Wen Wan conducts live-streamed product sales on multiple online platforms, with a combined total of over 6 million followers across her accounts. Her live streams are highly popular, and the product listings in her account showcases feature items priced at several hundred yuan each, with sales of several hundred units per item—butYet the amount of personal income tax she reported and paid was extremely small....which is completely out of line with the level of traffic generated by product promotions.

Even more outrageous is that the two online stores she manages have reported zero tax and fee figures in all categories since their inception.

While the live-streaming channel sees a flood of orders every day, the online store has never paid a single penny in taxes. This discrepancy sets off an automatic red flag in the tax system.

Step 2: Retrieve transaction records and secure evidence

When questioned by the inspectors, Wen Wan argued that she was “not very familiar” with tax laws and was unaware of the details of her tax filings, claiming that she had merely “helped sell women’s clothing and collected advertising and promotional revenue.”

However, after reviewing the sales data from the online store and the transaction records of multiple accounts under Wen Wan’s name, and cross-checking each transaction, the inspectors discovered that:Almost all of the sales revenue from the two online stores was withdrawn to Wen Wan's personal account.The

At the same time, the inspectors discovered that Wen Wan had registered a sole proprietorship—Shanghai Wanda Business Consulting Center. However, upon reviewing the company’s bank statements, they found that:Since its establishment, the company has never recorded any expenses for rent, utilities, or similar costs, and there are no employees associated with it who have made social security contributions.. The company was dissolved in 2023.

No premises, no employees, no actual business operations—this is a complete “shell company.”

Step 3: Restore the Truth and Impose Penalties in Accordance with the Law

An investigation revealed that from 2021 to 2023, Wen Wan’s income consisted of four components: wages and salaries, remuneration for services, business income, and income from property rentals. She evaded taxes in two ways:

Method 1: Receive payments through a personal account to conceal income.Revenue from online store sales does not go into the company’s account but is withdrawn directly to a personal bank card, where it “disappears” from the books.

Option 2: Register a shell company to change the nature of the income.Income from live-streaming e-commerce sales, which should have been classified as “income from services,” was disguised as “business income” and reported through a shell sole proprietorship.

Ultimately, Wen Wan underpaid a total of [amount] in personal income tax, value-added tax, and other taxes.3,134,500 yuan. Pursuant to Article 63 of the *Tax Collection and Administration Law of the People’s Republic of China*, the tax authorities ordered her to pay back taxes and fees, plus late payment penalties and a fine, totaling6.3196 million yuandecision on handling and penalties. Currently, all taxes, fees, late payment penalties, and fines related to the case have been fully collected and deposited into the treasury.

II. Disassembly: Two Methods, Two Risks

Wen Wan’s approach isn’t complicated, but it’s highly representative. Broken down, it consists of two things:

First, receiving payments through personal accounts to conceal income.

Proceeds from online store sales don’t go through the company’s business account but are withdrawn directly to a personal bank card. Many business owners have this habit—they feel that once the money is in their own pockets, it no longer counts as company revenue.

However, when determining whether a sum of money constitutes business income, the tax authorities,What matters is the actual source of the business, not which account the funds were deposited into.. Platform sales data, bank statements, and shipping information all prove that this money came from business operations. Personal bank accounts are not safe havens; on the contrary, they have become the most direct evidence used to determine whether income has been concealed.

Second, register a shell company and reclassify the nature of the revenue.

This is the most noteworthy tactic in this case. Wen Wan registered a sole proprietorship called “Shanghai Wanda Business Consulting Center” and reported her live-streaming income—which should have been classified as “remuneration for services”—as “business income.”

Why do this? Because the tax rates for the two are different:

• Income from Employment ServicesApply the progressive individual income tax rates specified in 3%–45%;
• Business IncomeThe tax rates applicable to 5%–35% apply; in some regions, tax authorities are also unlawfully imposing a fixed-rate tax, resulting in an even lower tax burden.

By registering a shell company to “disguise” high-tax-rate service income as low-tax-rate business income—this has been a common tax evasion tactic used by many live streamers and social media influencers in recent years.

However, a tax authority investigation revealed that the company “had no rent payments, no utility bills, no employees enrolled in social insurance, and no genuine business transactions—it was merely a ‘shell company’ used for issuing invoices and processing transactions.” Lü Chenggang, Chair of the Department of Economic Law at the School of Law, Zhejiang University of Commerce, pointed out that this seriously violates “Substance-Over-Form Principle”...is a typical illegal act of evading tax obligations by altering the nature of income.

Registering a company does not automatically change the nature of the income. The key factor in determining this is whether there is actual business operations.

III. Principles: How Exactly Are “Remuneration for Services” and “Business Income” Distinguished?

Many live streamers, social media influencers, and freelancers are asking the same question: Is my income classified as compensation for services rendered or as business income?

The law clearly defines this.

Pursuant to the *Individual Income Tax Law of the People’s Republic of China*,Income from Employment ServicesThis refers to income earned by individuals from the provision of services, including income derived from design, performance, advertising, consulting, brokerage, and agency services.Business IncomeThis refers to income earned by individually owned businesses from production and business operations, as well as income derived by investors in sole proprietorships and individual partners in partnerships from the production and business operations of their respective enterprises.

The key distinction lies in whether it possesses “commercial” characteristics.The

Lü Chenggang pointed out: If a live-streamer is not registered as a self-employed individual, a sole proprietorship, or a partnership, and earns income by independently engaging in service activities listed in the tax law, that income should be taxed in accordance withIncome from Employment ServicesTax calculation. If a streamer has registered as a business entity and operates through a studioEngage in substantive business operations, only then will the allocated income be subject toBusiness IncomeTax calculation.

“In this case, the live-streamer Wen Wan’s income is heavily dependent on her personal brand and fan engagement, and she handles content production and promotion primarily on her own, which fully meets the definition of income from services,” emphasized Lü Chenggang.

In June 2025, the State Taxation Administration issued the “Announcement on Several Matters Concerning the Withholding and Reporting of Taxes and Agency Filing by Internet Platform Enterprises on Behalf of Workers on Their Platforms” (State Taxation Administration Announcement No. 16 of 2025), which clarified matters related to the application of tax policies for platform workers.

Si Yanwu, a professor at the School of Finance and Taxation at Zhejiang University of Finance and Economics, emphasized: “Any act of filing false tax returns—with the intent of reducing the tax burden or underpaying taxes—by establishing a studio with no substantive business operations to reclassify personal service income as business income constitutes tax evasion.”

IV. Misconceptions: These 4 “I thought”s—How Many People Have They Tripped Up?

The reason many live-streamers and online store owners run into trouble isn’t because they don’t understand the law, but because they’ve put their faith in these “anecdotal tips”:

Misconception 1: “Money deposited into a personal bank account doesn’t count as company revenue.”

That’s exactly what Wen Wan thought—almost all of the online store’s sales revenue was withdrawn into her personal account. But with the platform’s sales data, bank statements, and shipping information all on record, and regardless of whose name the account was in, it didn’t change the fact that this money was business income.

Misconception #2: “Once you register a company, the nature of your income changes.”

Registering a sole proprietorship is merely a formality. Whether there is a physical location, employees, or actual business operations—these are the factors that determine tax treatment. A “shell company” with no rent, no utility bills, and no employees enrolled in social security can be seen through at a glance.

Misconception 3: “The platform has already withheld my taxes.”

Many live-streamers assume that once the platform withholds taxes on their behalf, they’re in the clear. But in the case of Wen Wan, the tax and fee declaration data for the two online stores she managed had been zero since their inception—whether the platform withheld taxes, how much it withheld, and whether you filed your own returns are three entirely separate matters.

Misconception 4: “I’m not familiar with tax law, so I’m not liable.”

When questioned, Wen Wan said she “did not have a thorough understanding of tax law.” However, Professor Si Yanwu clearly pointed out: “Regardless of whether the taxpayer followed the advice of a tax agency or was misled, as a taxpayer subject to the law, it is a legal obligation to file an accurate tax return and pay taxes in accordance with the facts. Lack of understanding of tax policies or being misled by a tax agency cannot serve as grounds for exemption from liability.”

V. Self-Assessment: How Many of These 5 Issues Apply to You?

If you are a live-streamer, influencer, MCN agency, or online store owner, you can check the following:

1. Did the business revenue go into a personal account?This includes bank cards, WeChat, and Alipay—any income derived from live-streamed product sales, platform sales, or commissions is considered business income.
2. Are the registered studios or businesses actually in operation?Do you have a physical location, employees, and actual business expenses? Or is it just a “shell” company that collects payments and issues invoices?
3. Do the reported income and the platform's transaction volume match up?The platform shows how much was sold for, and you reported how much income—how big is the difference between the two?
4. Is the classification of the income accurate?Is your income classified as compensation for services or business income? Have you ever “disguised” it through a shell company?
5. Have you consistently failed to file returns or filed zero returns on the grounds that you “did not understand”?

If any of the above issues apply, it is necessary to conduct a thorough review.In particular, cases involving both “receipts through private accounts” and “shell companies reclassifying the nature of income” pose extremely high risks.

If you're unsure which risk level applies to your situation, please send us your basic information, and Qicaiying will help you make a preliminary assessment.

📱 Phone: 18676749275 💬 WeChat: qcygscszk

VI. Reminder: The Tax Authority Is “Verifying Information,” Not “Auditing Accounts”

Many business owners are still under the misconception that the tax authorities are auditing their books.

In fact, tax authorities have long since moved beyond simply reviewing ledgers. They’re “cross-checking”—comparing several sets of data against one another:

• Platform data: How much the store sold for, how many orders it received, and how much commission it earned;
• bank run: Incoming and outgoing funds in corporate and personal accounts;
• Reported Data: How much income did you report, and how much tax did you pay?;
• Shipping Information: How many items were shipped, and how many were returned.

The key question is whether these sets of data can explain each other.

How was Wen Wan’s case discovered? It wasn’t because someone reported it, nor was it the result of a surprise inspection—It was detected through an automated comparison of tax big data.. The live stream is very popular and product sales are high, but the reported data is almost zero. This discrepancy will trigger an alert from the system itself.

On July 10, 2026, tax authorities publicly announced seven cases of tax evasion involving internet celebrities and online stores. Wen Wan was the internet celebrity with the largest following among them—totaling more than 6 million—and was also the streamer who evaded the most taxes, representing a classic case of “high traffic, low tax reporting.”

With the implementation of the *Regulations on the Reporting of Tax-Related Information by Internet Platform Enterprises* and the continuous improvement of the “data-driven tax administration” system, tax supervision of the platform economy has entered a new phase characterized by the rule of law and standardization.Attempts to use shell entities to alter the nature of income or abuse tax policies will ultimately be exposed under rigorous big data oversight.The

Just how much of a discrepancy is there between your platform’s transaction volume, your personal account receipts, and your tax return data?

If you're unsure, please send us your platform name, approximate annual revenue, and business entity type, and Qicaiying will conduct a quick risk assessment for you.

📱 Phone: 18676749275 💬 WeChat: qcygscszk

VII. Action: Four Things to Do Right Now

If, after reading this, you feel that “this has something to do with me,” here are some practical suggestions for action. This isn’t meant to panic you—it’s meant to get you moving.

First, verify the classification of your income.

This is the most fundamental and crucial step—is your income classified as compensation for services or business income?

The determining factor is not “what type of entity you registered,” but rather “the source of the income.” If your income relies heavily on your personal intellectual property, skills, or services—such as live streams you host, classes you teach, or consulting services you provide—then even if the funds pass through a corporate account, the tax authorities may still classify it as compensation for services rendered.

Getting this judgment right is more important than anything else.

Second, review the settlement data from all platforms under your name and calculate the difference between that data and your reported figures.

What is the platform’s sales revenue? How much was actually received? How much did you report? This difference is the most objective and indisputable figure among all risks.

If you've never done this before, you don't really know how great your actual risk is.It’s not that many people don’t want to comply; it’s that they simply don’t know how far they are from compliance.

Third, assess whether your existing business entity engages in “substantive business operations.”

Do you have a lease agreement? Do you have utility bills? Do you have proof of social security contributions?

If there is nothing but a business license and a payment invoice, then it is the kind of “shell company” seen in the Wen Wan case. The Wen Wan case has already proven that “shell companies” are no match for tax audits.

Fourth, if you discover any historical issues, do not blindly file supplementary reports on your own, and certainly do not rush to deregister the entity.

Deregistration does not eliminate historical obligations; rather, it may accelerate the exposure to risks.

The correct approach is to first identify the relevant years, amounts, and tax types involved, establish a complete chain of evidence, and then develop a compliance-oriented, cost-effective remediation plan.

VIII. What can we do for you?

Each of the four steps outlined above involves professional challenges. This is especially true for determining the nature of income and designing a corrective action plan—if the assessment is incorrect, the plan will be flawed; if the plan is flawed, both time and resources will have been wasted.

For live streamers, social media influencers, MCN agencies, freelancers, and e-commerce companies, Qicaiying offers:

• Determining the Nature of Revenue and Analyzing Business Models—Let’s Get Clear on How Your Revenue Should Be Classified Once and for All
• Comparing and Verifying Platform Settlement Data with Tax Return Data—Find Out Exactly How Much You’re Owing
• Assessment of a Business Entity’s Actual Operations—Is Your Registered Studio/Company a “Shell” or an Actively Operating Business?
• Evaluation of Plans for Correcting Historical Accounting Records and Filing Amended Returns—When Issues Are Identified, How to Address Them at the Lowest Cost
• Guidelines for Cost Documentation and the Chain of Evidence—Stop Relying on Just One Invoice; Ensure a Complete Chain of Evidence
• Establishing a Financial and Tax Compliance System and Long-Term Advisory Services—Making Compliance a Routine Practice, Not a Last-Minute Fix

If you're unsure whether your platform transaction volume, personal account receipts, and reported data match up, you can start by looking at a singleFinancial and tax compliance self-inspectionLet's get started. First, let's figure out your situation, and then we'll look at the options.

Don’t wait until a tax risk alert pops up on your screen before you start rummaging through your files to find orders and transaction records from several years ago. By then, it may not only be too late, but the costs and consequences will be entirely different.

statement denying or limiting responsibility

The content of this article is based on official cases published by tax authorities and is intended to provide general information on finance and taxation as well as to highlight compliance risks; it does not constitute any tax, legal, or financial advice. The cases and penalty outcomes mentioned in this article are derived from officially published information. If readers face specific tax issues, they should consult a qualified tax professional or the competent tax authority. Tax policies are subject to change at any time; please refer to the latest laws and regulations. Qicaiying assumes no legal liability for any losses arising from reliance on the content of this article.