tax Photo: VCG

Chinese Premier Li Qiang has signed a State Council decree introducing new regulations on tax-related information reporting by internet platform companies, which took effect immediately upon publication, the Xinhua News Agency reported on Monday. 

The document outlines 14 key provisions, including requiring online platform operators to submit tax-related information on merchants and workers operating on their platforms to the relevant tax authorities, according to the report.

According to the rules, internet platform companies are required to submit the identity information of operators and employees, as well as income data for the previous quarter, to their respective tax authorities within one month following the end of each quarter. Internet platform companies should standardize the preservation of tax-related information concerning operators and employees within their platforms.

The regulation also clarifies several core aspects about the tax information reporting, including exemptions from reporting obligations and measures to ease the reporting burden for internet platforms.

These rules aim to standardize tax reporting practices among internet platforms, enhance tax services and administration, safeguard taxpayers' legitimate rights and interests, foster a fair and unified tax environment, and support the sound and regulated development of the platform economy, according to Xinhua.

Under the exemption clause, online platforms are not required to submit tax information on individuals engaged in certain public convenience services, such as delivery, transportation, and domestic work, who either enjoy tax exemptions or are not subject to taxation under current laws. 

The exemption also applies to historical tax information generated before the regulation took effect, per the report.

To ease compliance burdens, the regulation stipulates that platforms are not required to submit duplicate information already reported through tax withholding or proxy declarations, or data accessible through inter-departmental information sharing.

It also mandates that tax authorities must offer secure and reliable channels for tax data submission, along with user-friendly interfaces and guidance services for policy interpretation.

As more segments of the convenience services sector migrate to digital platforms, the tax reporting responsibilities of these platforms have expanded, said Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance. "However, the decentralized nature of platform operations and the fact that many gig workers are often registered on multiple platforms, often with complex employment relationships, have significantly increased the difficulty of tax information collection and reporting."

Xiang noted that easing reporting requirements is expected to streamline operational processes for platforms, reduce their compliance burdens, and enhance efficiency. A more adaptable reporting regime may also help encourage flexible employment among low-income groups by supporting their ability to earn a reasonable income, he added.

The new regulation also requires that platform firms submit tax-related information via online or other specified channels, in accordance with the data formats and technical standards prescribed by the competent tax authority under the State Council.

Also, platforms are obligated to verify the tax information of merchants and workers on their platforms and are held responsible for ensuring the accuracy, authenticity, and completeness of the data, per the regulation.

However, it also specifies that if platforms have fulfilled their verification duties, they will not be held liable for any inaccuracies in the reported information resulting from errors by the platform's merchants or workers.

Xiang noted that the regulation reflects a practical and people-centered approach to governance in China's platform economy. "It is expected to further promote the long-term and healthy development of the digital platform sector," he added.