An online store with zero reported revenue, paired with a livestreaming channel boasting 6 million followers\u2014this \u201chidden accounting\u201d scheme was ultimately torn to shreds by tax big data.<\/p>\n\n\n\n
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 yuan<\/strong>The<\/p>\n\n\n\n From overnight fame to overnight infamy\u2014what exactly did she do? And how did the tax authorities uncover it? Today\u2019s article breaks down this story in detail.<\/p>\n\n\n\n Step 1: Data Comparison\u2014Initial Suspicious Findings Emerge<\/strong><\/p>\n\n\n\n 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\u2014butYet the amount of personal income tax she reported and paid was extremely small.<\/strong>...which is completely out of line with the level of traffic generated by product promotions.<\/p>\n\n\n\n Even more outrageous is that the two online stores she manages have reported zero tax and fee figures in all categories since their inception.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n Step 2: Retrieve transaction records and secure evidence<\/strong><\/p>\n\n\n\n When questioned by the inspectors, Wen Wan argued that she was \u201cnot very familiar\u201d with tax laws and was unaware of the details of her tax filings, claiming that she had merely \u201chelped sell women\u2019s clothing and collected advertising and promotional revenue.\u201d<\/p>\n\n\n\n However, after reviewing the sales data from the online store and the transaction records of multiple accounts under Wen Wan\u2019s 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each transaction, the inspectors discovered that:Almost all of the sales revenue from the two online stores was withdrawn to Wen Wan's personal account.<\/strong>The<\/p>\n\n\n\n At the same time, the inspectors discovered that Wen Wan had registered a sole proprietorship\u2014Shanghai Wanda Business Consulting Center. However, upon reviewing the company\u2019s 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.<\/strong>. The company was dissolved in 2023.<\/p>\n\n\n\n No premises, no employees, no actual business operations\u2014this is a complete \u201cshell company.\u201d<\/p>\n\n\n\n Step 3: Restore the Truth and Impose Penalties in Accordance with the Law<\/strong><\/p>\n\n\n\n An investigation revealed that from 2021 to 2023, Wen Wan\u2019s income consisted of four components: wages and salaries, remuneration for services, business income, and income from property rentals. She evaded taxes in two ways:<\/p>\n\n\n\n Method 1: Receive payments through a personal account to conceal income.<\/strong>Revenue from online store sales does not go into the company\u2019s account but is withdrawn directly to a personal bank card, where it \u201cdisappears\u201d from the books.<\/p>\n\n\n\n Option 2: Register a shell company to change the nature of the income.<\/strong>Income from live-streaming e-commerce sales, which should have been classified as \u201cincome from services,\u201d was disguised as \u201cbusiness income\u201d and reported through a shell sole proprietorship.<\/p>\n\n\n\n Ultimately, Wen Wan underpaid a total of [amount] in personal income tax, value-added tax, and other taxes.3,134,500 yuan<\/strong>. Pursuant to Article 63 of the *Tax Collection and Administration Law of the People\u2019s Republic of China*, the tax authorities ordered her to pay back taxes and fees, plus late payment penalties and a fine, totaling6.3196 million yuan<\/strong>decision 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.<\/p>\n\n\n\n Wen Wan\u2019s approach isn\u2019t complicated, but it\u2019s highly representative. Broken down, it consists of two things:<\/p>\n\n\n\n First, receiving payments through personal accounts to conceal income.<\/strong><\/p>\n\n\n\n Proceeds from online store sales don\u2019t go through the company\u2019s business account but are withdrawn directly to a personal bank card. Many business owners have this habit\u2014they feel that once the money is in their own pockets, it no longer counts as company revenue.<\/p>\n\n\n\n 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.<\/strong>. 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.<\/p>\n\n\n\n Second, register a shell company and reclassify the nature of the revenue.<\/strong><\/p>\n\n\n\n This is the most noteworthy tactic in this case. Wen Wan registered a sole proprietorship called \u201cShanghai Wanda Business Consulting Center\u201d and reported her live-streaming income\u2014which should have been classified as \u201cremuneration for services\u201d\u2014as \u201cbusiness income.\u201d<\/p>\n\n\n\n Why do this? Because the tax rates for the two are different:<\/p>\n\n\n\n By registering a shell company to \u201cdisguise\u201d high-tax-rate service income as low-tax-rate business income\u2014this has been a common tax evasion tactic used by many live streamers and social media influencers in recent years.<\/p>\n\n\n\n However, a tax authority investigation revealed that the company \u201chad no rent payments, no utility bills, no employees enrolled in social insurance, and no genuine business transactions\u2014it was merely a \u2018shell company\u2019 used for issuing invoices and processing transactions.\u201d L\u00fc Chenggang, Chair of the Department of Economic Law at the School of Law, Zhejiang University of Commerce, pointed out that this seriously violates \u201cSubstance-Over-Form Principle\u201d<\/strong>...is a typical illegal act of evading tax obligations by altering the nature of income.<\/p>\n\n\n\n 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.<\/strong><\/p>\n\n\n\n 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?<\/p>\n\n\n\n The law clearly defines this.<\/strong><\/p>\n\n\n\n Pursuant to the *Individual Income Tax Law of the People\u2019s Republic of China*,Income from Employment Services<\/strong>This refers to income earned by individuals from the provision of services, including income derived from design, performance, advertising, consulting, brokerage, and agency services.Business Income<\/strong>This 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.<\/p>\n\n\n\n The key distinction lies in whether it possesses \u201ccommercial\u201d characteristics.<\/strong>The<\/p>\n\n\n\n L\u00fc 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 Services<\/strong>Tax calculation. If a streamer has registered as a business entity and operates through a studioEngage in substantive business operations<\/strong>, only then will the allocated income be subject toBusiness Income<\/strong>Tax calculation.<\/p>\n\n\n\n \u201cIn this case, the live-streamer Wen Wan\u2019s 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,\u201d emphasized L\u00fc Chenggang.<\/p>\n\n\n\n In June 2025, the State Taxation Administration issued the \u201cAnnouncement on Several Matters Concerning the Withholding and Reporting of Taxes and Agency Filing by Internet Platform Enterprises on Behalf of Workers on Their Platforms\u201d (State Taxation Administration Announcement No. 16 of 2025), which clarified matters related to the application of tax policies for platform workers.<\/p>\n\n\n\n Si Yanwu, a professor at the School of Finance and Taxation at Zhejiang University of Finance and Economics, emphasized: \u201cAny act of filing false tax returns\u2014with the intent of reducing the tax burden or underpaying taxes\u2014by establishing a studio with no substantive business operations to reclassify personal service income as business income constitutes tax evasion.\u201d<\/strong><\/p>\n\n\n\n The reason many live-streamers and online store owners run into trouble isn\u2019t because they don\u2019t understand the law, but because they\u2019ve put their faith in these \u201canecdotal tips\u201d:<\/p>\n\n\n\n Misconception 1: \u201cMoney deposited into a personal bank account doesn\u2019t count as company revenue.\u201d<\/strong><\/p>\n\n\n\n That\u2019s exactly what Wen Wan thought\u2014almost all of the online store\u2019s sales revenue was withdrawn into her personal account. But with the platform\u2019s sales data, bank statements, and shipping information all on record, and regardless of whose name the account was in, it didn\u2019t change the fact that this money was business income.<\/p>\n\n\n\n Misconception #2: \u201cOnce you register a company, the nature of your income changes.\u201d<\/strong><\/p>\n\n\n\n Registering a sole proprietorship is merely a formality. Whether there is a physical location, employees, or actual business operations\u2014these are the factors that determine tax treatment. A \u201cshell company\u201d with no rent, no utility bills, and no employees enrolled in social security can be seen through at a glance.<\/p>\n\n\n\n Misconception 3: \u201cThe platform has already withheld my taxes.\u201d<\/strong><\/p>\n\n\n\n Many live-streamers assume that once the platform withholds taxes on their behalf, they\u2019re 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\u2014whether the platform withheld taxes, how much it withheld, and whether you filed your own returns are three entirely separate matters.<\/p>\n\n\n\n Misconception 4: \u201cI\u2019m not familiar with tax law, so I\u2019m not liable.\u201d<\/strong><\/p>\n\n\n\n When questioned, Wen Wan said she \u201cdid not have a thorough understanding of tax law.\u201d However, Professor Si Yanwu clearly pointed out: \u201cRegardless 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.\u201d<\/strong><\/p>\n\n\n\n If you are a live-streamer, influencer, MCN agency, or online store owner, you can check the following:<\/p>\n\n\n\n If any of the above issues apply, it is necessary to conduct a thorough review.In particular, cases involving both \u201creceipts through private accounts\u201d and \u201cshell companies reclassifying the nature of income\u201d pose extremely high risks.<\/strong><\/p>\n\n\n\n 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.<\/strong><\/p>\n\n\n\n \ud83d\udcf1 Phone: 18676749275 \ud83d\udcac WeChat: qcygscszk<\/strong><\/p>\n\n\n\n Many business owners are still under the misconception that the tax authorities are auditing their books.<\/p>\n\n\n\n In fact, tax authorities have long since moved beyond simply reviewing ledgers. They\u2019re \u201ccross-checking\u201d\u2014comparing several sets of data against one another:<\/strong><\/p>\n\n\n\n The key question is whether these sets of data can explain each other.<\/strong><\/p>\n\n\n\n How was Wen Wan\u2019s case discovered? It wasn\u2019t because someone reported it, nor was it the result of a surprise inspection\u2014It was detected through an automated comparison of tax big data.<\/strong>. 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.<\/p>\n\n\n\n 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\u2014totaling more than 6 million\u2014and was also the streamer who evaded the most taxes, representing a classic case of \u201chigh traffic, low tax reporting.\u201d<\/p>\n\n\n\n With the implementation of the *Regulations on the Reporting of Tax-Related Information by Internet Platform Enterprises* and the continuous improvement of the \u201cdata-driven tax administration\u201d 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.<\/strong>The<\/p>\n\n\n\n Just how much of a discrepancy is there between your platform\u2019s transaction volume, your personal account receipts, and your tax return data?<\/strong><\/p>\n\n\n\n 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.<\/strong><\/p>\n\n\n\n \ud83d\udcf1 Phone: 18676749275 \ud83d\udcac WeChat: qcygscszk<\/strong><\/p>\n\n\n\n If, after reading this, you feel that \u201cthis has something to do with me,\u201d here are some practical suggestions for action. This isn\u2019t meant to panic you\u2014it\u2019s meant to get you moving.<\/p>\n\n\n\n First, verify the classification of your income.<\/strong><\/p>\n\n\n\n This is the most fundamental and crucial step\u2014is your income classified as compensation for services or business income?<\/p>\n\n\n\n The determining factor is not \u201cwhat type of entity you registered,\u201d but rather \u201cthe source of the income.\u201d If your income relies heavily on your personal intellectual property, skills, or services\u2014such as live streams you host, classes you teach, or consulting services you provide\u2014then even if the funds pass through a corporate account, the tax authorities may still classify it as compensation for services rendered.<\/p>\n\n\n\n Getting this judgment right is more important than anything else.<\/strong><\/p>\n\n\n\n Second, review the settlement data from all platforms under your name and calculate the difference between that data and your reported figures.<\/strong><\/p>\n\n\n\n What is the platform\u2019s sales revenue? How much was actually received? How much did you report? This difference is the most objective and indisputable figure among all risks.<\/p>\n\n\n\n If you've never done this before, you don't really know how great your actual risk is.<\/strong>It\u2019s not that many people don\u2019t want to comply; it\u2019s that they simply don\u2019t know how far they are from compliance.<\/p>\n\n\n\n Third, assess whether your existing business entity engages in \u201csubstantive business operations.\u201d<\/strong><\/p>\n\n\n\n Do you have a lease agreement? Do you have utility bills? Do you have proof of social security contributions?<\/p>\n\n\n\n If there is nothing but a business license and a payment invoice, then it is the kind of \u201cshell company\u201d seen in the Wen Wan case. The Wen Wan case has already proven that \u201cshell companies\u201d are no match for tax audits.<\/p>\n\n\n\n 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.<\/strong><\/p>\n\n\n\n Deregistration does not eliminate historical obligations; rather, it may accelerate the exposure to risks.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n 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\u2014if the assessment is incorrect, the plan will be flawed; if the plan is flawed, both time and resources will have been wasted.<\/p>\n\n\n\n For live streamers, social media influencers, MCN agencies, freelancers, and e-commerce companies, Qicaiying offers:<\/p>\n\n\n\n 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-inspection<\/strong>Let's get started. First, let's figure out your situation, and then we'll look at the options.<\/p>\n\n\n\n Don\u2019t 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.<\/strong><\/p>\n\n\n\n statement denying or limiting responsibility<\/strong><\/p>\n\n\n\n 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.<\/em><\/p>","protected":false},"excerpt":{"rendered":" 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\u2019s first-generation internet celebrities.<\/p>\n 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\u2014a live-streaming host like this should, in theory, be raking in a fortune.<\/p>\n However, the tax authorities\u2019 findings regarding her tax filings were shocking: for the two online stores run by Wen Wan (real name Xu Jingwan), all tax and fee filings had been reported as zero since their establishment.<\/p>\n An online store with zero reported revenue, paired with a livestreaming channel boasting 6 million followers\u2014this \u201chidden accounting\u201d scheme was ultimately torn to shreds by tax big data.<\/p>\n 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: it ordered her to pay back taxes and fees, imposed late payment penalties, and levied a fine, for a total of 6,319,600 yuan.<\/p>\n From overnight fame to overnight infamy\u2014what exactly did she do? And how did the tax authorities uncover it? Today\u2019s article breaks down this story in detail.<\/p>","protected":false},"author":10,"featured_media":9745,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,18,13,64],"tags":[615,238],"class_list":["post-12699","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-allguide","category-recomguide","category-guide","category-gf-tax-compliance","tag-615","tag-238"],"yoast_head":"\nI. Incident: The \u201cHidden Accounts\u201d of the First Generation of Internet Celebrities\u201d<\/h2>\n\n\n\n
II. Disassembly: Two Methods, Two Risks<\/h2>\n\n\n\n
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III. Principles: How Exactly Are \u201cRemuneration for Services\u201d and \u201cBusiness Income\u201d Distinguished?<\/h2>\n\n\n\n
IV. Misconceptions: These 4 \u201cI thought\u201ds\u2014How Many People Have They Tripped Up?<\/h2>\n\n\n\n
V. Self-Assessment: How Many of These 5 Issues Apply to You?<\/h2>\n\n\n\n
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![\"\"](\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/03\/20260323160847384.jpg\")
<\/figure>\n\n\n\nVI. Reminder: The Tax Authority Is \u201cVerifying Information,\u201d Not \u201cAuditing Accounts\u201d<\/h2>\n\n\n\n
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<\/figure>\n\n\n\nVII. Action: Four Things to Do Right Now<\/h2>\n\n\n\n
VIII. What can we do for you?<\/h2>\n\n\n\n
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