China has published new rules requiring live-streaming platforms to provide reports on their live-streamers twice a year and to deduct personal income tax from live-streamers’ revenue, as reported by SCMP on March 31. Specifically, the reports need to include information such as personal identity, online nickname, payment account, income type, and the total profits of live-streamers. Additionally, the new rules prohibit the live-streaming platforms from inducing the audience to buy products or services using false marketing or topping. According to the Wall Street Journal, people familiar with the matter also disclosed that China is drafting new regulations to cap internet users’ daily monetary spending on digital tipping and live-streamers’ daily income from fans.

The new rules provide a clear mechanism for taxation and content supervision in the live-streaming sector, which used to operate in a legal grey area and face problems such as fraud, wealth collection, and tax evasion. Before the new regulations were rolled out, live-streamers in China generally tried to avoid some taxes within a reasonable range as they are not obliged to disclose the information on live-streaming revenue to tax authorities. Last December, one of China’s top live-streamers in the e-commerce industry, Viya, was charged with evading RMB643m (USD101m) of taxes and underpaying other taxes by RMB60m (USD9.43m). As a result, the taxation department enforced a tax administrative punishment on Viya and fined her a total of RMB1.341bn (USD210.3m).

Sources:

https://www.scmp.com/tech/policy/article/3172614/china-tech-crackdown-no-more-tax-free-riches-live-streaming-stars

https://www.wsj.com/articles/china-plans-new-restrictions-in-its-booming-live-streaming-sector-11648603781

https://pandaily.com/chinese-regulators-curb-on-live-streaming-industry

https://pandaily.com/chinese-livestreaming-queen-viya-fined-210-3-million-for-tax-evasion/