CHINA Trends and Developments Contributed by: Ying Ding, Shihui Partners
These documents establish a new tax-related infor - mation reporting regime for the platform economy – requiring platform operators to report the demanded identity and income information of on-platform opera - tors and individual workers to the tax authorities. The reporting regime is intended to better implement the Electronic Commerce Law, standardise the tax regulatory framework for the platform economy, and promote tax fairness. It is specifically designed to address long-standing and common tax misconduct in the live-streaming sector involving multi-channel networks (MCNs) and streamers. The inaugural reporting took place in October 2025. The reporting regime has significantly strengthened tax big-data management, supporting information cross-checking and verification. Since its implemen - tation, the STA has published several cases in which penalties were imposed on MCNs and streamers. Notably, overseas platform operators may also be subject to the reporting regime if they have on-plat - form operators, workers or customers in China. Enhanced administration of resident individuals and their overseas income In 2018, China undertook a major reform of the indi - vidual income tax (IIT) system. The revised Individual Income Tax Law (IIT Law) took effect on 1 January 2019. The IIT Law defines resident and non-resident indi - viduals as follows: • resident individuals – individuals who have a domicile in China, or individuals who do not have a domicile in China but have resided in China for an aggregate of 183 days or more in a tax year; and • non-resident individuals – individuals who do not have a domicile in China and have not resided in China, or individuals who do not have a domicile in China but have resided in China for less than an aggregate of 183 days in a tax year (ie, they do not meet the 183-day presence requirement).
In general, resident individuals are liable for IIT on their worldwide income, while non-resident individuals are liable for IIT on income from sources within China. The IIT Law classifies individuals’ taxable income into nine categories: • income from salary and wages; • income from remuneration for personal services; • income from author’s remuneration; • income from royalties; • income from business operation; • income from interest, dividends, or bonuses; • income from leasing of assets; • income from transfer of assets; and • incidental income. For resident individuals, the first four categories are collectively defined as “Comprehensive Income”. After the end of each tax year, resident individuals must file an annual tax reconciliation return between 1 March and 30 June of the following tax year to set - tle any underpaid or overpaid IIT on comprehensive income. During the same filing period, resident indi - viduals must also report their overseas income and settle any unpaid IIT on that. Starting from the 2024 tax year, the tax authorities have intensified law enforcement relating to the taxa - tion of resident individuals’ overseas income, rely - ing on financial account information obtained via the Common Reporting Standard (CRS). Many individu - als have been notified by the tax authorities to self- declare overseas income from previous tax years (mostly from the 2022 tax year onwards), and pay IIT in arrears together with late-payment surcharges. Reports suggest that law enforcement may extend to earlier tax years since the STA first obtained financial account information via the CRS. It is also noteworthy that law enforcement of the 183- day presence test has become stricter. This affects not only foreign nationals working and living in China, but Chinese individuals who have acquired foreign citizenship or residency but continue to work and live in China.
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