Livestreamer Fan Sifeng was sentenced to pay back taxes, late fees, and penalties after failing to submit his complete income to tax officials between July 2017 and December 2021.
Another Influencer Charged $970,00 for Tax Irregularities
Another influencer was fined 6.5 million yuan (US$970,300) for tax payment violations as part of China's ongoing tax crackdown on the nation's once-burgeoning live-streaming business.
According to a statement issued on Thursday (June 30) by the tax authority of Xiamen, a city in southeast Fujian province, Sifeng was ordered to pay the back taxes, late fees, and fines after he failed to report his entire income to tax authorities, avoiding more than 2.6 million yuan in taxes between July 2017 and December 2021.
In 2021, the livestreaming e-commerce sector changed drastically due to increased scrutiny. Some of the greatest names in the business have vanished from online platforms after engaging in tax-related scandals.
Huang Wei, who goes by the name Viya, was penalized 1.3 billion yuan for tax fraud in December and hasn't been seen online since. A short while earlier, Zhu Chenhui, one of China's top three live-streamers on Taobao Live from Alibaba Group Holding, had also been penalized millions of yuan for tax cheating.
Li Jiaqi dubbed the "lipstick king" for allegedly selling 15,000 tubes of lipstick in five minutes, vanished from the internet more recently following a kerfuffle surrounding ice cream that some said had the shape of a tank. The live feed was interrupted the night before June 4, the anniversary of the Tiananmen Square crackdown in 1989.
Since taxes in the live-streaming sector have long been a contentious topic, a new law mandating platforms to deduct personal income tax from live-streamers profits was announced in March. This requirement might result in substantially higher tax liabilities for streaming providers.
No Tax-Free Wealth for Live-Streaming Stars as Beijing Tightens Control
Legal experts predict that China's recently released live-streaming legislation would put a stop to live-streamers hopes for tax-free wealth.
Platforms are required to submit twice-yearly reports on their live-streamers that include information like personal identification, bank account information, and income details under new regulations jointly issued by the Cyberspace Administration of China, State Administration of Tax, and State Administration for Market Regulation.
The legislation, which took effect on Wednesday, requires platforms to subtract personal income tax from live-streamers earnings, which could result in significant tax obligations for online influencers.
Wang Yang, a lawyer at Yingke Law Firm, said that the new regulations offer a specific method for collecting taxes, in contrast to prior rules when authorities would just urge individuals to "pay taxes appropriately."
Additionally, the rules also prohibit extravagant or deceptive livestream promotion. Authorities said live-streamers who compare prices should also provide text instructions to safeguard customers.
Tipping expenditure limitations could significantly reduce industry revenues depending on how firmly the new laws are followed.
Streaming platforms foresee a slowdown under new tax laws. Tax enforcement hurt Tencent Music Entertainment's first-quarter earnings. Last year, social entertainment, including live-streaming tips, produced roughly two-thirds of the company's income.
