China’s government has reportedly observed a notable surge in tax revenues stemming from online vendors.
This information emanates from a recent report by the Financial Times, which also highlighted the mounting pressures that the nation’s novel tax regime imposes on merchants.
In the wake of a newly instituted law last year, corporations such as Amazon, Shein, and Alibaba have been obligated to furnish data pertaining to merchants’ profits, according to revelations from local tax authorities.
According to Lian Qifeng, a director within the State Taxation Administration, over 7,000 eCommerce platforms had submitted tax-related information by the close of the third quarter.
This initiative has catalyzed a 12.7% elevation in tax revenues derived from eCommerce platforms during the year’s third quarter, coinciding with China’s quest for alternative revenue avenues amid a decelerating economic landscape.
“Data-driven taxation has emerged as a crucial instrument in the authorities’ repertoire,” remarked Quan Kaiming, a partner at Allbright Law Offices. He added that the new regulations foster equitable competition, albeit at the potential expense of heightened compliance expenditures and data security vulnerabilities.
For sellers grappling with narrow profit margins, the report indicated that an elevated value-added tax of 13% for companies exceeding 5 million yuan in sales could prove detrimental.
“This will be catastrophic for us all. Previously, we were exempt from taxation, which was our primary advantage in the online market,” stated Huang, an Amazon exporter based in Quanzhou.
“Profit margins for Amazon sellers hover around 8%, with few exceeding 20%,” Huang elaborated. “It is quite unreasonable for cross-border merchants like us to face a tax burden as steep as 13%.”
In other eCommerce developments, PYMNTS reported last week about the “massive operational burden” that returns impose on retailers during this season.
Insights from the National Retail Federation (NRF), in collaboration with Happy Returns, projected that retail returns in the United States would soar to $849.9 billion by 2025, representing approximately 15.8% of total retail sales.
“Online transactions disproportionately contribute to this figure, with the NRF estimating that 19.3% of eCommerce sales are subject to returns,” the report noted.
“Although the overall return rate is slightly below 2024 levels, the absolute dollar volume continues to approach a trillion-dollar conundrum, increasingly impacting retailers’ balance sheets rather than being absorbed as a growth cost.”
Holiday sales further intensify this strain. The NRF anticipates that U.S. holiday retail sales will surpass $1 trillion for the first time, with projections indicating that around 17% of holiday purchases will be returned.
Source link: Pymnts.com.
