Ecommerce Tax on the Move.doc

1、Ecommerce Tax on the MoveThe ecommerce is doubtlessly one of the most energetic industries in China in the past ten years. Almost starting from scratch， it is now an industry worth 5.88 trillion yuan （the data in 2011） and accounts for 12.5% of this countrys GDP. Many legendary names are connected w

2、ith the ecom- merce： Ma Yun， Taobao， Tmall， Alibaba There are many more unknown names around the ecommerce， but their lies could not be separated from ecommerce. Hundreds of thousands of individuals have opened shops in Taobao， the largest C2C website in China， and many of them treat this as their m

3、eans of survival and live on Taobao. Do not forget that there are a lot of enterprises ? big or small ? relying on， or at least connecting with the B2C website Tmall and the B2B website Alibaba， Flourish as it is， the ecommerce is actually a rich mine which has not been found by the tax department.

4、But this is very likely to come to an end within this year， as the relevant government department has already taken collecting tax from ecommerce dealers as one of its primary plans. Timetable The proposal was made by Zhang Jindong， board chairman of Suning， a China-based home appliance retail compa

5、ny， during the parliamentary sessions this March. Zhang Jindongs company was also a player in the ecommerce and he claimed his belief that the tax on ecommerce is good for the development of entire industry. At the beginning of June， it was reported that the State Administration of Taxation of China

6、 was studying the detailed measures about imposing taxes on ecommerce dealers. The tax rate is said to be fixed at 5% and the tax will take effect within this year. This is not a surprise. Actually， after Zhang Jindongs proposal， the General Administration of Industry and Commerce proposed to modify

7、 the Temporary Management Measures about Internet Commodities Trade and Relevant Services. On April 1， the State Administration of Taxation began to carry out the Management Rules of Internet Receipts and Invoices， which for the first time established the issuance and e-invoice as a normal and manda

8、tory act. Since receipts and invoices are the bases for collecting taxes （the amount of tax an enterprise should pay is gained by timing the amount on the receipt/invoice with the tax rate） ， it is widely believed that this is the prequel to the implementation of tax on ecommerce. The prequel was fo

9、llowed by several governmental documents about the “connection and link between the ecommerce and Internet invoices”. The government seems to be eager to spread the Internet invoices as widely as possible at a pace as fast as it can， bridging the final gap for the coming-out of ecommerce tax. On May

10、 24， the General Administration of Industry and Commerce summoned Tecent， Alibaba and other ecommerce enterprises ? 12 in total ? to a meeting to talk about regularizing the online trade and services. On the same day， the Ministry of Commerce confirmed that several governmental departments， includin

11、g the taxation and commercial administrative departments， are working together to study the Law of Promoting Ecommerce， in which the tax on ecommerce is very likely to be included. Ji Dongsheng， deputy directior of the Tax Research Institute at the State Administration of Taxation， said that the“stu

12、dy into ecommerce tax was actually started ten years ago”. “We have been studying this for long， ” he said. “Actually， people had a misunderstanding that ecommerce is completely free of tax. Actually， the enterprises stationed in B2C websites need to pay the value-added tax and income tax. The C2C d

13、ealers are not required to pay the tax， and some B2C enterprises do not issue the receipt unless required by consumers. What we want to change are these two matters.” Benefits Zhang Jindong made the proposal about the ecommerce tax because he believed that this was good for the development of ecomme

14、rce. In his proposal， Zhang Jindong pointed out that 90% of the Internet dealings are done in the name of B2C but actually in the form of C2C. Those deals mostly sway from the legal supervision and regulation， leading to severe piracy， falsehood and property infringement. Zhang Jindong also pointed

15、out that the European countries have long imposed tax over the ecommerce. Among them， the British government carried out the Act of Ecommerce in 2002， imposing three levels of tax rate （standard 17.5%， discount 5% and zero） over all commodities traded online. In Germany， the prices of online-traded

16、commodities contain the value-added tax. Several advocators also listed the United States as an example. The United States was a little earlier than China in the collection of tax from ecommerce dealers. On May 4， the U.S. Congress passed the Act of Market Equality. According to this Act， every ente

17、rprise that sells the products online with the value of over US$1 million per year needs to pay the sales tax. “Bill Gates and Warren Buffett also support this Act， ”they said. But they obviously ignored the fact that eBay and many Internet enterprises furiously objected this act. The advocators bel

18、ieved that the ecommerce tax might bring about a great amount of income to the government， and it can wipe out some small ecommerce dealers， which they blamed for the blemishes in the ecommerce. “Those strong and responsible enterprises can survive this and they can bring a more neatly-organized eco

19、mmerce market to China， ” they said. Dream Destroyer？ The advocators of ecommerce tax had their belief and reasons， but there are also a lot of complaints about this. Especially those small dealers living on their online shops. As the primary advocator， Zhang Jindong was severely criticized over his

20、 true intention to make such a proposal. His company Suning is a latecomer in the ecommerce. Even though it had made remarkable progress in the past， it was still suppressed by Taobao， Tmall， 360Buy and other early players. So， people doubt that Zhang Jindong， a witty and ambitious businessman， made

21、 use of his role as a councilman for the Chinese government， to propose the ecommerce tax to sabotage the base of Taobao， which basically consists of small ecommerce dealers， and bring certain damages to Tmall， the biggest B2C website in China and a twin of Taobao， so his S ? the B2C counterpart of

22、Suning ? could earn a better opportunity. Zhang Jindongs Microblog received many curses， even though he denied that his proposal had any personal intention in it. The government was also criticized over the ecom- merce tax. Many Internet users posted online， calling the taxation department “vampires

23、” that finally begin to hunt ecommerce after sucking out the blood of land and small enterprises， “The government on one hand encourages people to start up their own businesses. On the other hand， they extend their taxation arms everywhere， crushing those ordinary peoples hope to live on themselves，

24、 ” one the representative posts said. As a possible victim to the ecommerce tax， Taobao immediately jumped out and voiced its objection， like eBay did in the United States. An insider of Taobao directly expressed his doubt that Zhang Jindongs proposal was for his own good. He also said that the ecom

25、merce tax was necessary but should not come out so soon， so suddenly that the dealers have no time to prepare for it. “Young men are inspired by the opportunities Taobao gives to them. They have a dream about accumulating assets by themselves with the help of Taobao， ” he said. “The ecommerce tax， i

26、f not properly implemented or abused for someones ambitions， might destroy many young peoples dreams.” Dealers Questions Maybe that Taobaos insider said something about dream for the sake of Taobao， but it is a true case for the small dealers stationed in Taobao. Pingan Securities published a report

27、， saying that the ecommerce tax might have little influence over the B2C dealers ? mostly enterprises， but it would dramatically increase the cost for C2C dealers， especially those startups. Xingqing （alias） was a business owner stationed in Taobao. She was not a green hand， and her business had alr

28、eady developed to a certain size with the annual income of 1 million yuan and profits of 100 thousand yuan. But she also held doubts about the ecommerce tax.“The government has promised to take measures to encourage the development of private economy， right？ Then why is there ecommerce tax on me and

29、 other dealers？” said this young mother. She said that the ecommerce tax might force them to increase the price of commodities they sell， depriving them of their only advantage. Mr. Shu， who just opened his shop in Taobao in April， frankly admitted that the ecommerce tax will impact all C2C dealers，

30、 no matter which size they have. “Some big dealers with the annual avenue of over 1 million yuan have to spare 2 thousand yuan for tax. A high figure for Internet dealers who are hard to earn money from their business （the cost is also very high） ， ”he said. “Running business in Taobao is getting mo

31、re and more difficult as there are an increasing number of rules， ” he added.“If the ecommerce tax is really implemented， many young peoples enthusiasm in establishing stores will be quenched. The biggest appeal of Taobao is that it allows people to start their business with little or zero cost. The

32、 tax will doubtlessly destroy this.” “The jobs are so hard to find in todays society and very few men own the wisdom， luck and， above all， connections to start and prosper their own enterprises. If this outlet is blocked， what should we do？” said a to-be college graduate. He wanted to establish a sm

33、all shop in Taobao but now he really wonders whether this is a good idea. Advices Even though there are a lot of rumors about the impending ecommerce tax， a certain number of experts think， or at least hope， that the ecommerce tax should not come out before the end of this year， because it will take

34、 some time to collect ideas from all sides. The experts also believe that the ecommerce tax will finally come， if not in this year. But they give out some advices concerning the tax. One： do not impose tax on all dealers. Some experts think that the 5% tax rate is not that convincing because it is u

35、nfair to treat the online dealers in the same way with substantial stores. Therefore the tax rate might be lower. In addition， there are a lot of new and small dealers in Taobao and some other websites. As mentioned above， the tax will bring great harm to these dealers. Therefore， the governmental d

36、epartment is advised to adopt different tax rates based on the revenue and profits of each dealer. Those dealers whose annual revenue or profits are lower than a certain level are free of tax. Two： give dealers some time to prepare. Taobao needs some time to let its dealers to get used to the tax. T

37、hats what Ma Yun said. An ecommerce dealer also said that it is right to carry out the ecommerce tax， but a detailed schedule must be given out， which must include some time for preparation so that dealers can adjust their strategies and reserve some capital for the operation. Three： treat all deale

38、rs equally. Small dealers are believed to be the biggest victims if the ecommerce tax is carried out. Without any strength， they could not fight against the law. But some big dealers， especially those B2C dealers， might make use of their network and power to avoid the tax. This will be extremely unfair for small dealers. “We hope that the ecommerce tax system would work for