The following content is based on real-life case studies of clients we have served; the data has been anonymized.<\/em><\/p>\n\n\n\n If you, like this seller, are facing high platform transaction volumes, few cost-based invoices, and risk alerts,Add me on WeChat at qcygscszk or call 18676749275<\/strong>, Please send us the basic details, and Qi Cai Ying will provide you with a preliminary assessment.<\/em><\/p>\n\n\n\n A seller in the Pearl River Delta who runs a Pinduoduo store specializing in daily necessities has been in business for over two years, operating on a low-margin, high-volume model, with annual platform sales totaling several million.<\/p>\n\n\n\n Sales at the store have been consistently good, but he knows full well that there are a few issues that still haven\u2019t been resolved:<\/p>\n\n\n\n Question 1: The gross pay looks high, but the actual take-home pay isn't that much.<\/strong><\/p>\n\n\n\n The platform shows sales of 5 million, but when you factor in returns, refunds only, various platform deductions, and compensation payments, the actual net amount received may be only 4 million. However, the tax authorities see the 5 million in transaction volume reported by the platform\u2014how do you explain the discrepancy?<\/p>\n\n\n\n Question 2: Most Purchases Lack Invoices<\/strong><\/p>\n\n\n\n Suppliers source their goods from small factories and wholesale markets, and many don\u2019t even have business licenses. Purchasing costs account for the lion\u2019s share of expenses, but there are almost no invoices\u2014only bank transfer records and screenshots of WeChat payments.<\/p>\n\n\n\n Question 3: Mixing Personal and Store Accounts<\/strong><\/p>\n\n\n\n Sometimes I receive payments through my store account, sometimes I transfer funds to my personal card, and sometimes I use WeChat Pay or Alipay to make or receive payments\u2014it\u2019s impossible to keep track of where the money is going.<\/p>\n\n\n\n Question 4: I received a risk alert.<\/strong><\/p>\n\n\n\n A few days ago, he received a risk alert from the tax authorities\u2014noting a discrepancy between his platform sales data and his tax return data\u2014and was asked to verify the information.<\/p>\n\n\n\n His first reaction was:\u201cWill we have to pay the full amount of back taxes based on the platform\u2019s total turnover?\u201d<\/strong><\/p>\n\n\n\n If he were required to pay the full amount based on 5 million in turnover\u2014including VAT, income tax, late payment penalties, and fines\u2014his business might not be able to survive.<\/p>\n\n\n\n Many Pinduoduo sellers feel that:\u201cI operate on a low-margin, high-volume model\u2014my profit margin is less than 10%\u2014so how could I possibly pay that much in taxes?\u201d<\/strong><\/p>\n\n\n\n This logic holds true in business, but not in tax matters.<\/p>\n\n\n\n The tax authorities don't look at your profit margin; they look at your \u201cchain of evidence.\u201d<\/strong><\/p>\n\n\n\n Back when regulations were more lenient, platform data wasn\u2019t integrated with the tax system, so the tax authorities could only see the figures you reported\u2014they couldn\u2019t access the platform\u2019s transaction records. Whatever you reported was accepted at face value, and no one checked for discrepancies.<\/p>\n\n\n\n But now the situation has completely changed.<\/p>\n\n\n\n What has changed?<\/strong><\/p>\n\n\n\n Since the beginning of 2024, tax authorities in many parts of the country have begun implementing a mechanism for the \u201cautomatic submission of e-commerce platform data.\u201d Platforms submit sellers\u2019 sales and settlement data to the tax authorities, which then compare this data with tax return information.<\/p>\n\n\n\n If the match is successful, everything is fine. If there is no match, the system will automatically display a pop-up window.<\/strong><\/p>\n\n\n\n That\u2019s where the \u201crisk alert\u201d comes from. It\u2019s not because someone reported you, nor because the tax authorities are targeting you\u2014it\u2019s because the system detected an anomaly during a data comparison and automatically triggered the alert.<\/p>\n\n\n\n So the question now is: How much of a discrepancy is there between your platform\u2019s sales data, your actual settlement revenue, and your tax return data?<\/strong><\/p>\n\n\n\n If you can't explain this discrepancy yourself, you won't be able to explain it when the tax authorities contact you.<\/p>\n\n\n\n Based on the actual situation of this store and similar sellers on Pinduoduo, you can check against the following six risk areas:<\/p>\n\n\n\n The \u201csales\u201d figure displayed on the platform includes all items, such as refunds, refunds only, platform deductions, compensation, and shipping insurance. However, the actual amount received may only be 70%\u201380% of the total transaction amount.<\/p>\n\n\n\n The problem is:<\/strong> The data the tax authority receives consists of the total transaction volume reported by the platform. If you report your income based on the actual amount received, the system will automatically flag it as \u201creported amount lower than platform data\u201d during the comparison process.<\/p>\n\n\n\n Pinduoduo has a high proportion of \u201crefund-only\u201d transactions, which is a unique feature of its business model. However, many sellers do not keep complete records of refunds, so when tax authorities conduct audits, they are unable to clearly account for \u201chow much of their transaction volume consists of refunds.\u201d<\/p>\n\n\n\n This is a common challenge faced by Pinduoduo sellers. Whether sourcing from small suppliers, wholesale markets, or 1688, very few can provide invoices.<\/p>\n\n\n\n What does it mean to not have an invoice?<\/strong> Your costs cannot be deducted before taxes, so the tax authorities can only assess your tax liability based on your \u201ctotal income.\u201d<\/p>\n\n\n\n For the sake of convenience, many small sellers have their store proceeds deposited directly into their personal bank accounts and use their personal WeChat or Alipay accounts to pay for purchases.<\/p>\n\n\n\n What are the consequences?<\/strong> During a tax audit, large-scale fund transfers in your personal account will be deemed \u201cconcealed income\u201d unless you can prove that the money is not business income.<\/p>\n\n\n\n Because they lack purchase invoices and their inventory receipt procedures are not standardized, many sellers simply cannot account for \u201chow much merchandise they received, how much they sold, and how much is left in stock.\u201d<\/p>\n\n\n\n Why is this a problem?<\/strong> During a tax audit, if there are logical inconsistencies among your purchase volume, sales volume, and inventory levels, this will be deemed a \u201cfalse cost deduction\u201d or \u201cconcealment of revenue.\u201d<\/p>\n\n\n\n The Pinduoduo platform offers various subsidies, coupons, and spend-and-save promotions. Some are covered by the platform, while others are covered by merchants. If these aren\u2019t clearly distinguished in your accounts, the tax authorities will assume that \u201call discounts are profit concessions by merchants\u201d\u2014which is equivalent to underreporting your revenue.<\/p>\n\n\n\n After receiving a risk alert, this seller found us through a friend\u2019s referral. Once our finance and tax team got involved, we didn\u2019t rush to \u201cpay back taxes\u201d or \u201camend tax returns\u201d; instead, we first helped him with one thing:Find out the true state of his business.<\/strong><\/p>\n\n\n\n Export all order, refund, after-sales, subsidy, and settlement data from the platform and reconcile each transaction on a monthly basis:<\/p>\n\n\n\n Conclusion:<\/strong> The platform shows a transaction volume of over 5 million, but the actual amount settled and received is just over 4 million. The difference of 1 million consists of refunds, refunds only, platform deductions, and compensation payments.<\/p>\n\n\n\n He didn't have any invoices, but he did have records of purchase payments\u2014screenshots of WeChat transfers, bank transfers, and Alipay payments\u2014each of which corresponded to actual goods received into inventory.<\/p>\n\n\n\n We did three things for him:<\/p>\n\n\n\n We cross-checked his procurement, sales, and inventory data for the past two years\u2014the goods received, the goods sold, and the remaining inventory\u2014and found that the three figures matched up.<\/p>\n\n\n\n This is the most critical step.<\/strong> It can prove that your procurement costs are genuine, your sales are genuine, and your inventory is genuine. There may be no invoices, but there is evidence.<\/p>\n\n\n\n Based on the three sets of data above, the actual tax burden for various taxes and fees\u2014including value-added tax and individual income tax\u2014was calculated separately according to his taxpayer status and the method of collection.<\/p>\n\n\n\n Compile all the data and evidence into a \u201cSpecial Report\u201d:<\/p>\n\n\n\n This statement will serve as the basis for future communication with the tax authorities\u2014proving that \u201cI have not concealed any income, and this is how my business operates.\u201d<\/p>\n\n\n\n If no action is taken:<\/strong><\/p>\n\n\n\n The tax authority has assessed income based on the 5 million transaction volume reported by the platform. Taking into account VAT at a rate of 13%, individual income tax on business income, late payment penalties, and fines, the total tax burden may exceed 15%.<\/p>\n\n\n\n 5 million \u00d7 15% = 750,000 or more<\/strong><\/p>\n\n\n\n When you add in the fines, the total could easily exceed 1 million.<\/p>\n\n\n\n After reviewing historical accounts, verifying costs, and providing specific explanations:<\/strong><\/p>\n\n\n\n Based on actual settlement revenue of 4 million, after deducting verifiable costs, taxable income is significantly reduced. The overall tax burden is kept within5% or less<\/strong>The<\/p>\n\n\n\n 4 million \u00d7 5% = Under 200,000<\/strong><\/p>\n\n\n\n How much is the difference?<\/strong> It was off by several hundred thousand.<\/p>\n\n\n\n More importantly\u2014it\u2019s not about \u201cwhether you can pay less in taxes,\u201d but \u201cwhether you can prove how much tax you should pay.\u201d<\/p>\n\n\n\n If there is evidence, we can negotiate. Without evidence, we can only passively accept the assessment.<\/p>\n\n\n\n If any of the above applies to you, we recommend that you do one thing first:<\/strong><\/p>\n\n\n\n All the platforms under your nameSales Data, Settlement Data, Reporting Data<\/strong>Let's pull it out and check it against the original.<\/p>\n\n\n\n If you've never done this before, you may not realize just how great your actual risk is.<\/p>\n\n\n\n To address historical accounting and tax risks faced by sellers on e-commerce platforms such as Pinduoduo, Taobao, and Douyin, Qicaiying offers:<\/p>\n\n\n\n If you\u2019ve also received a risk alert, or if you\u2019re unsure whether your platform\u2019s transaction history matches your reported data, feel free to add us on WeChat and send us the basic details\u2014Qicaiying will help you make a preliminary assessment.<\/p>\n\n\n\n Add me on WeChat at qcygscszk or call 18676749275<\/strong><\/em><\/strong><\/p>\n\n\n\n Founded in 2015 and headquartered in Shenzhen, Qicaiying Group is a leading provider of corporate services and tax compliance solutions in China.<\/p>\n\n\n\n The Group is deeply committed to providing services across the entire corporate lifecycle. Its core business areas include: business registration, bookkeeping services, tax compliance, overseas company registration (Hong Kong, the U.S., Singapore, Mexico, etc.), cross-border structuring, outbound direct investment (ODI) filing, overseas tax planning, bank account opening assistance, and identity planning.<\/p>\n\n\n\n Over the past decade, Qicaiying has served more than 10,000 corporate clients and has accumulated solid practical experience in key areas such as corporate structuring in Hong Kong and overseas, cross-border tax and financial compliance, and corporate accounting management. The Group boasts a team of seasoned financial and tax advisors who closely monitor changes in domestic and international tax systems and regulatory trends, providing clients with one-stop solutions ranging from structural planning to implementation.<\/p>\n\n\n\n statement denying or limiting responsibility<\/strong><\/p>\n\n\n\n The content of this article is based on actual service cases; client information has been anonymized. This article is intended to provide general information on finance and taxation and to highlight compliance risks; it does not constitute any tax, legal, or financial advice. 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":" \u201dThe store is operating normally, and the money is coming in as usual\u2014what could possibly be wrong?\"<\/p>\n This is what many Pinduoduo sellers are really thinking.<\/p>\n This is especially true for sellers of daily necessities and small goods\u2014their gross profit margins are already slim, and they rely on high volume. They make just a few mao or a few yuan per item, face high return rates, and are subject to various platform fees. With profits already so low, who has time to worry about invoices and taxes?<\/p>\n It wasn\u2019t until they received the tax risk alert that many people realized: With such high transaction volumes on the platform but such low reported income, how on earth could they explain this discrepancy to the tax authorities?<\/p>","protected":false},"author":10,"featured_media":12193,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,13,64],"tags":[1612,1574,1572],"class_list":["post-12740","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-allguide","category-guide","category-gf-tax-compliance","tag-1612","tag-1574","tag-1572"],"yoast_head":"\n![\"\"](\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/03\/20260323160847384.jpg\")
<\/figure>\n\n\n\nI. You Might Have the Same Problem with This Store<\/h2>\n\n\n\n
II. Just because no one enforced the rules in the past doesn\u2019t mean they won\u2019t be enforced now.<\/h2>\n\n\n\n
III. Six Common Risk Areas for This Type of Store<\/h2>\n\n\n\n
Risk 1: Significant Discrepancy Between the Platform\u2019s Sales Volume and Actual Settlement Revenue<\/h5>\n\n\n\n
Risk 2: Incomplete Records of Refunds and Returns<\/h5>\n\n\n\n
Risk 3: No Invoices for Procurement Costs<\/h5>\n\n\n\n
Risk 4: Mixing Personal and Business Accounts<\/h5>\n\n\n\n
Risk 5: Discrepancies Between Inventory, Purchases, and Sales Volumes<\/h5>\n\n\n\n
Risk 6: Unclear Responsibility for Platform Subsidies and Promotions<\/h5>\n\n\n\n
4. How did this store handle the situation?<\/h2>\n\n\n\n
Step 1: Restore the Actual Order Settlement<\/h5>\n\n\n\n
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Step 2: Complete the procurement evidence chain<\/h5>\n\n\n\n
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Step 3: Cross-check inventory, purchasing, and sales data<\/h5>\n\n\n\n
Step 4: Calculate the Tax Burden<\/h5>\n\n\n\n
Step 5: Prepare a Specialized Explanation<\/h5>\n\n\n\n
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VI. After handling the matter, he did the math.<\/h2>\n\n\n\n
VII. If you\u2019re also a Pinduoduo seller, you might want to check these points against your own situation<\/h2>\n\n\n\n
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VIII. What can we do for you?<\/h2>\n\n\n\n
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Who is this for?<\/h2>\n\n\n\n
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<\/figure>\n\n\n\nEnterprise Finance Group<\/strong><\/h2>\n\n\n\n