China should consider digital tax for tech firms, regulators say

Out-Law News | 23 Dec 2020 | 4:27 am | 1 min. read

China should consider imposing a digital tax on technology companies, Yao Qian, science and technology supervision bureau chief at the China Securities Regulatory Commission (CSRC) said at a forum recently.

According to Yao, a digital tax would enable users to share in the benefits they have helped create for the platforms they use.

China's Ministry of Finance former vice minister Zhu Guangyao also mentioned that it is time to conduct a general study on digital taxation both internationally and domestically, particularly targeted research on large internet firms.

E-commerce expert Leo Xin at Pinsent Masons, the firm behind Out-Law, said, "A digital tax in China is at the research and study stage. I do not think China will quickly introduce a digital tax in near future. According to the PRC legislative law, institution of new taxable items and the determination of tax rates will be within the power of the National People’s Congress of the PRC. In general, it is a time-consuming process in China to have a bill enacted. For the time being, we are not aware of that the National People's Congress (NPC) has received any proposal of any bill in relation to the digital tax and this is even not included in the latest NPC’s legislative working plan."

"On the other hand, in China, most of the giant tech firms focus on the domestic markets and their revenues are mainly from Chinese customers. If a digital tax is levied, it might increase the tax burden of these firms," he said.

China’s Banking and Insurance Regulatory Commission chairman Guo Shuqing said this month that there was a need to contain cybersecurity risks and to clarify the companies rights’ over user data.