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China To Enforce Tax And Registration System For E-Commerce

Monday, February 8, 2010

In accordance with "Internet Information Services" (State Council Order No. 292), the Beijing Bureau of Industry and Commerce, responsible for business registration and regulation in China, said it wishes to revive 2008 plans to register and tax e-commerce in order to 'standardize its regulation and combat illegal Internet activities, promoting the integrity of the system'.

“Like any other area of business, web commerce should be registered and taxed according to the law,” Wu Song, an official with the press office of the Beijing Bureau of Industry and Commerce was quoted as saying by China's Global Times. Beijing first announced the web store registration and taxation policy in August 2008, but no shops have registered to date because the policy was not enforced.

The registration fee is likely to vary according to area between RMB100 to RMB200 (up to USD29), and the taxation on sales would be 3% according to local press reports. More effective promotion of the system is likely to be rolled out by mid-March, ostensibly for 'consumer protection' purposes.

No details were given as to how the system would be enforced, but it was suggested that penalties could range from a warning imprinted on the respective website, damaging to the reputation of the trader, to complete shut-down of the website.

The Beijing Bureau of Industry and Commerce would probably proceed with enforcement initially where consumer complaints were received; some 4,700 consumer complaints were investigated in Beijing in 2009, leading to 1,067 prosecutions.

The China Internet Network Information Center has estimated that e-commerce sales amounted to about 2% of total consumer goods retail sales in 2009, growing 94% in the year to a total of USD36.6bn.