New Delhi, Jan 5 (NationPress) The Chinese government has intensified its tax collection efforts from online vendors as part of a larger initiative to enhance state revenues in light of a decelerating economy, a recent report has indicated.

Following the implementation of a new tax regulation in October, ecommerce giants like Alibaba, Shein, and Amazon have started to provide comprehensive data to tax officials.

This data encompasses merchants' identities, transaction details, revenue figures, profits, and even income derived from virtual gifts or digital assets, as outlined in documents from local tax authorities, according to a Financial Times report.

Officials have noted that this initiative is already yielding results. By the conclusion of the third quarter, over 7,000 ecommerce platforms had relayed tax-related information, as stated by Lian Qifeng, a director at the State Taxation Administration.

During a briefing in December, Lian announced that this effort contributed to a 12.7% increase in tax revenue from ecommerce platforms in the third quarter compared to the previous year, although he did not reveal the total sum collected.

This crackdown occurs at a time when China's economic landscape faces challenges. The growth rate hit its lowest point in a year during the third quarter, hindered by the trade conflict with the US and a persistent downturn in the real estate sector.

With land sales plummeting and conventional revenue streams dwindling, Beijing is increasingly turning to the rapidly expanding online economy for new fiscal resources, including from merchants, influencers, and livestreamers.

To enhance tax collection, the State Taxation Administration has initiated several campaigns.

These campaigns include urging mainland investors to pay a 20% tax on global capital gains, reducing tax breaks in regions linked to excessive industrial output, and targeting businesses that inflate invoices to fraudulently claim tax refunds.

Online retail of tangible goods reached Rmb12.8tn ($1.8tn) in 2024, making up nearly 27% of China's overall retail sales, according to official statistics.

However, analysts suggest that online enterprises have traditionally contributed less to tax revenues than physical stores.

Despite platforms being technically obligated to report sales data since 2019, enforcement was previously lax.

The new legislation establishes clearer guidelines and stringent deadlines, resulting in enhanced oversight. Lian mentioned that tax authorities have consistently cautioned sellers whose self-reported income was significantly lower than figures reported by platforms.

This approach has helped bridge the tax gap between online and offline merchants. Legal experts believe this shift represents a significant turning point.

“Data-driven taxation has become the ultimate tool in the authorities’ arsenal,” remarked Quan Kaiming, a partner at Allbright Law Offices in Shanghai.

While the new regulations foster equitable competition, he warned that they also elevate compliance costs and data security concerns, particularly for influencers and livestreaming businesses.

Numerous online sellers express apprehension regarding the effects on already slim profit margins. Companies with annual revenues exceeding Rmb5mn face a 13% value-added tax, a burden some merchants claim could eliminate their profits.

However, Alibaba, Shein, and Amazon have yet to comment on the situation.