08 July 2025 China | Offshore internet platforms now subject to tax reporting requirements
China's new Internet Platform Enterprise Tax Information Reporting Regulation (the Regulation) took effect on 20 June 2025, establishing comprehensive reporting obligations for both domestic and offshore internet platform operators. Offshore internet platforms providing profit-making services in China are explicitly included within the regulatory scope, ensuring tax compliance parity across all market participants. The regulation is supported by two implementing bulletins from the State Taxation Administration clarifying the detailed reporting requirements as well as the tax withholding procedures. The first reporting deadlines are 30 July 2025 for basic information and 31 October 2025 for third-party sellers and individual practitioner data. China's digital economy has experienced rapid growth in recent years, playing an increasingly important role in optimizing resource allocation, driving industrial upgrades and expanding market opportunities. The tax information obtained by internet platforms regarding their third-party sellers and individual practitioners (such as merchants, service providers, influencers, live streamers and other participants) represents crucial foundation data for effective tax administration. This new regulatory framework addresses the need for systematic oversight of platform-mediated transactions while supporting and guiding the development of new business models and ensuring equitable tax treatment between online and offline businesses, as well as fair competition between domestic and offshore platform operators. The Regulation, enacted as State Council Order No. 810, is intended to reflect China's commitment to establishing a unified and fair tax environment that promotes standardized and healthy development of the platform economy. By requiring comprehensive reporting from all platforms operating in China's market, regardless of where they are incorporated, the Regulation should help prevent regulatory arbitrage through offshore structures. The Regulation defines covered platforms broadly, specifically including offshore internet platforms within its scope. Offshore internet platforms are defined as legal entities or unincorporated organizations established under offshore jurisdictions that operate internet platforms through domain names outside of China, providing profit-making services such as online business premises, transaction facilitation and information publishing to domestic sellers, individual practitioners or purchasers in China.
The Regulation establishes a clear hierarchy for determining reporting responsibilities among offshore internet platforms. Offshore platforms with licensed entities in China. When offshore internet platforms have established operating entities in China, the domestic entity holding a value-added telecommunications business license shall be responsible for the reporting. Offshore platforms having entities in China but without a relevant license. If domestic operating entities in China do not have telecommunications licenses, the domestic entity providing merchant onboarding, store operations, marketing promotion and similar services for the offshore platform must take on reporting obligations. Offshore platforms with no presence in China. Offshore internet platforms without any operating presence in China should designate domestic agents to handle their reporting. Basic information reporting for the platform. Offshore internet platforms should submit comprehensive basic information using prescribed forms, with updates required whenever fundamental business details change. Third-party sellers and individual practitioner identity data. Offshore internet platforms are only required to report detailed identity information for domestic sellers and individual practitioners in China, including both registered business entities (business names, unified social credit codes, addresses, store identifiers) and unregistered individuals (names, identification documents, jurisdictions, contact information). Identity information for overseas third-party sellers and individual practitioners is not required. Revenue information reporting. Offshore internet platforms are required to report revenue information for third-party sellers and individual practitioners selling services or intangible assets to domestic purchasers during the preceding quarter. A practical exemption applies if an individual domestic purchaser's quarterly cumulative transaction amounts is no more than 5,000 Chinese Renminbi (RMB5k).
For platforms operating in foreign currencies, revenue reporting should use RMB conversion based on exchange rates effective on either the first day of the reporting month or the transaction date, with conversion methods remaining fixed for 12-month periods.
Noncompliance incidents will be incorporated into taxpayers' credit rating evaluations, with potential public disclosure for enterprises with two or more violations within a single year. Platforms (including offshore internet platforms) and related parties must provide transaction details, funding account information, and logistics data when requested during tax inspections. They are expected to cooperate fully and should not decline or withhold relevant information by citing technical issues, account restrictions or data access limitations. The above-mentioned mandatory information reporting obligations should significantly increase the transparency of offshore internet platforms' transactions and operations in China. This enhanced visibility into platform activities may enable Chinese tax authorities to identify previously undetected tax liabilities, including potential value-added tax (VAT) obligations, individual income tax (IIT) for practitioners and corporate income tax (CIT) liabilities through permanent establishment (PE) rules, where applicable, that may have been overlooked under less transparent operating models. For example, an offshore internet platform may be subject to China VAT when it provides services or intangible assets to be consumed in China and the recipients fail to withhold VAT, or if the goods sold originate from or are located domestically, etc. Offshore internet platforms, as nonresident enterprises, may have CIT implications in China. While the platform is deemed to have PE in China, they are taxed on China-source income attributable to the PEs and related offshore income. If no PE is constituted, they are subject to CIT on China-sourced income. Moreover, offshore platforms may be required to fulfill IIT withholding and VAT proxy filing obligations for third-party sellers and individual practitioners, though platforms without domestic establishments may face practical difficulties. Although the current new rules provide a comprehensive framework, practical implementation will depend significantly on detailed guidance from China's tax authorities. Offshore internet platforms should pay particular attention to forthcoming implementing regulations addressing cross-border data transmission requirements, technical interface standards, and coordination with potentially broader China tax implications and compliance obligations. The regulation represents a significant step toward comprehensive administration of China's digital economy, helping to ensure that all market players contribute to fair and transparent tax administration. Platforms operating in China's market should begin immediate preparation to meet the approaching compliance deadlines while positioning themselves for long-term regulatory alignment. Given that offshore internet platforms must submit their basic information by 30 July 2025, and considering the complex interplay of reporting obligations, potential China tax implications and additional requirements, platforms should consult with China tax professionals to ensure comprehensive compliance and optimal structuring of their China operations.
Document ID: 2025-1405 | ||||||
