China to tighten livestreaming industry supervision
Platforms, individuals should fulfill tax obligations: authorities
Published: Mar 30, 2022 08:29 PM
A villager sells straw products through livestreaming in Binzhou, East China's Shandong Province on Sunday. The city has been actively exploring straw-related products and adjusting the agricultural industry's structure to increase local farmers' incomes and revitalize the rural economy. Photo: cnsphotos

A villager sells straw products through livestreaming in Binzhou, East China's Shandong Province. Photo: cnsphoto

Chinese regulators will standardize and tighten the profit-making behavior of livestreaming to promote the healthy development of the industry. Tax evasion and other wrongdoings will be investigated and dealt with in accordance with the law. Serious offenses will be made public. 

As livestreaming, especially e-commerce livestreaming, is rapidly growing, there is a need to strengthen the tax obligations of livestreamers. The new rules are conducive to creating a fair and orderly environment for competition. Livestreaming should not become a gray area of the online economy, said analysts.

China will strengthen the registration and classification management of live broadcast accounts. Livestreaming platforms, service agencies and individuals should fulfill their tax obligations, read a notice issued by China's cyber, tax and market supervision authorities on Wednesday.

The notice involved new rules that standardize online live broadcast marketing activities to maintain market order. Livestream platforms and livestreamers should not conduct false or misleading commercial publicity on commodity producers and operators as well as the performance, function, quality, source, honors won, qualification, sales status, transaction information, user evaluation and other statistics of the products.

However, the legitimate rights and interests of live broadcast platforms, service agencies and individuals that operate in accordance with regulations and laws should be protected, read the notice published on the website of the State Taxation Administration.

This is a nationwide, industry-specific regulation. Livestreaming is a small part of the internet. But for a long time, there has often been a false and exaggerated atmosphere, affecting social order, Zhang Xiaorong, director of the Beijing-based Cutting-Edge Technology Research Institute, told the Global Times on Wednesday.

"The notice focuses on income taxes dodging. It clarifies the management responsibilities of livestreaming platforms and standardizes the commercial development path of the livestreaming industry," said Zhang.

The new document is a more detailed regulation covering the country's livestreaming industry, Liu Dingding, a Beijing-based independent tech analyst, told the Global Times on Wednesday.

Last year, China's then top livestreamer Huang Wei, nicknamed Viya, was fined 1.34 billion yuan ($210 million) for dodging taxes by local authorities in Hangzhou, capital of East China's Zhejiang Province, an e-commerce hub that's home to China's e-commerce giant Alibaba.

Such a harsh penalty prompted a reshuffle of the entire livestream industry, to move to adjust business practices, bid farewell to the wild money-making model, and embrace fairer competition.

Rather than calling the move a restriction of the industry as some foreign media outlets have done, Liu clarified that China's tightened rule is to preserve and take better care of the new business model. 

"A healthier environment will benefit the expansion and growth of industry leaders like TikTok, Kuaishou or Huya," Liu said.

An obvious improvement over the past year is that videos featuring sexualized content, gambling and other serious fraudulent and deceptive behavior, no longer exists in the livestreaming market, the analyst said. 

The China Association of Performing Arts valued the country's livestreaming industry at the equivalent of about $30 billion in 2020.

The number of online livestreaming users in China has reached 617 million in 2020, which went up to 703 million by 2021, according to reports on China's internet development released by the China Internet Network Information Center. 

By 2020, the number of Chinese e-commerce livestreaming users was 388 million, and the number rose to 464 million by 2021, according to CNNIC.

"China has basically established a general regulation mechanism for the internet sector, covering livestreaming and e-commerce among others," Liu said, predicting that the country's market regulators will likely issue more regulations to guide the sector's growth. 

A livestreamer who preferred to remain anonymous told the Global Times on Wednesday that starting from 2021, leading platforms such as Douyin had much stricter rules in regulating livestreamers' behavior, and the promotion of fake products is banned. 

"We are also prohibited from saying 'exaggerated and provocative words' that may lead to irrational consumption," the person said.