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China slams top influencers with largest ever tax fines amid livestream crackdown

Written by Jiaxing Li Published on     2 mins read

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The billion-dollar livestreaming business is expected to be constrained by more regulations.

Two e-commerce livestreaming influencers were fined by the local tax regulators in Hangzhou, an e-commerce hub in China, according to the announcement released by Zhejiang Province’s tax bureau on Monday. This is the largest ever tax evasion penalty levied against influencers as regulators tighten control of the livestream sector.

The two livestreamers, Zhu Chenhui and Lin Shanshan, were fined RMB 65.5 million (USD 10 million) and RMB 27.7 million (USD 4.34 million), respectively, for declaring personal wages as corporate income, local tax regulators said. Zhu and Lin were caught evading personal income tax to the tune of RMB 30.4 million (USD 4.8 million) and RMB 13.1 million (USD 2 million), respectively, making the fines more than double those amounts.

Both cases were tagged for deeper investigation by a big data analysis system, a representative of Hangzhou’s tax administration said in a separate note. The tax department is currently investigating other livestreamers who are suspected of personal tax evasion, the officials said.

Chen and Lin each posted a public apology letter on Weibo on Monday, saying they would comply with regulations, suspend their livestream events, and contribute to the “sustainable development of the online entertainment industry” in the future.

The record-setting tax charges come after the National Radio and Television Administration said last month that it would strengthen regulation of the online entertainment industry, especially e-commerce livestreaming and short video platforms. Before that, the authority said that two unnamed high-profile influencers were investigated for tax evasion, KrASIA previously reported.

Livestreaming e-commerce has taken off in China in the past few years and evolved beyond merely a medium for shopping. The top two influencers in China, “Lipstick King” Austin Li Jiaqi and “Livestream Queen” Viya, have amassed millions of followers on social media. They are viewed as key opinion leaders for fashion and beauty, and have even started their own reality shows.

Viya and Li can often attract millions of viewers to watch their livestreams by promising they offer the best deals. The frenzy generates flashy sales numbers. On the first day of this year’s Singles’ Day shopping event, the two figures sold more than RMB 19 billion (USD 3 billion) worth of goods to their viewers.

The market size of China’s e-commerce livestreaming industry was over RMB 1.2 trillion (USD 190 billion) in 2020. It is expected to reach RMB 4.9 trillion (USD 770 billion) in 2023, according to consulting firm iResearch.

As Chinese regulators have tightened control of the online entertainment sector after several celebrity scandals, including sexual assault and tax invasion cases earlier this year, the e-commerce livestreaming industry is also expected to come under stricter scrutiny. On Monday, state media outlet People’s Daily commented on Weibo that besides tax invasions, other illegal activities like false advertising must be regulated. The post’s author called for tighter policy control.

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