What’s new: Ping Rong, an e-commerce livestreamer who had 24 million followers on Kuaishou, a video-sharing and livestreaming app, was hit with a financial penalty of 62 million yuan ($9.8 million) to cover fines for tax evasion, overdue taxes, and fees for late payment, the Guangzhou tax bureau announced on Tuesday.
Ping is the latest in a string of high-profile tax evasion cases in the livestreaming industry to be exposed after local authorities used “big data tax analysis” to alert them to potential transgressions.
The investigation found that in 2019 and 2020, Ping evaded personal income tax of 19.3 million yuan by concealing commission income, and underpaid another 14.5 million yuan in taxes after failing to declare certain business income. Ping’s account on Kuaishou, which is run by Hong Kong-listed Kuaishou Technology, has now disappeared.
Unlike other livestreamers who were found to have evaded tax, such as “Weiya” Huang Wei, Ping appears not to have exploited a loophole in the tax system. The practice involves setting up multiple sole-proprietorship companies and partnerships and reporting commission income as more lightly taxed business income.
The background: Livestreaming e-commerce boomed in China in 2019 and rapidly became an internet phenomenon, creating thousands of celebrity livestreamers with millions of followers each. Local and global consumer goods companies have made a beeline for the top streamers hoping to capitalize on their sales skills, which can often see them offload their entire inventory of a product during a single live sales session. Brands can hand over a considerable cut of product sales as commission to livestreamers.
Following a series of tax evasion cases in the entertainment industry, the State Taxation Administration said in September that it was tightening a crackdown on tax evasion among top entertainers, including online influencers and their studios and related businesses. More than 1,000 livestreamers have had their tax affairs examined and paid back-taxes since then, the state-run Xinhua News Agency reported in December.
Related: Cover Story: Chinese Livestreamers’ Tax Evasion Calls for Systematic Tax Reform
Contact reporter Zhang Yukun (yukunzhang@caixin.com) and editor Nerys Avery (nerysavery@caixin.com)
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