China to Tax Online Business

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July 3 – China has announced that online businesses are now required to register and pay taxes. The new rule covers corporations as well individuals who make profit online.

The rule does not apply to people who sell or swap personal goods online not for profit, according to sources.

The Beijing Administration for Industry and Commerce (BAIC) said that those affected should register their businesses with the administration beginning August 1.

Online businesses have long been exempt from taxes thus being able to offer lower prices compared to registered merchants.

Recently, the number of online shops have been increasing selling anything from cosmetics to watches to child-care products.

A BAIC official Wang Jing told Xinhua that the administration did not define the term “personal goods” or “goods for personal use.”

“We don’t want to impose too strict rules on online activities in order to keep those activities as vibrant as possible.”

He added, “Any disputes on goods for personal use or business not for profits should be judged by courts or arbitration authorities.”

Under the new rule, websites will be responsible for verifying the business certification of their online sellers. Online business websites will be required to keep transaction records for at least two years. Violations will be fined anywhere from RMB20,000 to RMB500,000.