China tells big tech to reveal some customers' income

Livestreamed infomercials are huge, but some creators aren't paying tax


China's massive live-streaming industry is the next target of China's tech regulation blitz, with three governmental agencies announcing a requirement for operators to register in an attempt to eliminate tax evasion.

The three regulatory bodies – the Cyberspace Administration of China (CAC), the State Taxation Administration (STA) and the State Administration for Market Regulation (SAMR) – issued a notice on "regulating the profit-making behavior of online live broadcasting" that details the changes and requirements to the $30 billion industry. The audience for live-streaming in the Middle Kingdom topped 700 million people last year, according to Statista.

While the law bans live streamers from selling products via rumor-mongering, self-rewarding or false publicity – such as self-tipping to promote hype and garner real tips – it more pointedly prohibits tax evasion, It's a signal that Beijing is eager to catch the tax revenues associated with variable part-time self-employment.

And just to make sure everyone knows who is participating in this particular corner of the gig economy, online platforms will have to report the real and online names of live-streamers – as well as their income and profits – every six months. The live-streamers themselves must register and provide national social credit numbers. That requirement is in line with previous regulations requiring netizens and gamers to verifiably identify themselves to services they use

While live-streaming was already hugely popular in China at the beginning of 2020, it grew even more during the pandemic as punters shopped more online, or decided that selling on TikTok or short video platform Kuaishou might bring in some extra Yuan.

This regulatory move from Beijing isn't entirely unexpected, given that two of China's top live-streamers were fined and banned from the activity after authorities determined that they had failed to pay their taxes.

Shopping influencer Huang Wei, known as Viya, was hit with the ban and a $210 million penalty at the end of 2021 after allegedly evading $100 million in taxes by falsely reporting her commission income. Huang had often appeared on Weibo, Taobao and Douyin.

An influencer named Pingrong, who often appeared on Kuaishou, was banned and fined $10 million last month for alleged similar offenses.

China's previously called on livestreamers to ensure their content is wholesome, and honest. But Beijing is also keen on the infomercials, recently highlighting how they're enabling regional businesses to crack export markets and thereby proving that investments in connectivity have an economic dividend. ®

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