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Beijing to mend loophole in tax evasion of online shops

(Xinhua)
Updated: 2008-07-03 16:09

BEIJING - The Beijing municipal government announced here Thursday it would require all individuals or vendors doing online businesses to register and pay taxes on their transactions.

The Beijing Administration for Industry and Commerce (BAIC) said on its website, www.baic.gov.cn, that all corporate entities or individuals who do online businesses have to register with the administration starting August 1, something which makes profit from their online businesses taxable. The only exception is for people who sell or swap personal goods not for profit.

Online businesses, particularly those of small groups or individuals, have long been ignored for taxation. In recent years, a number of online shops were opened, with sales ranging from cosmetics, watches, consumer electronics, luxury bags, brand clothes and child-care products, among others.

Most products were imported but enjoyed price advantages over registered merchants due to lower costs without taxation, thus were welcomed by fashionable but budget-conscious customers.

A BAIC official Wang Jing said the administration did not clarify what "personal goods" or "goods for personal use" were. "We don't want to impose too strict rules on online activities in order to keep those activities as vibrant as possible."

"Any disputes on goods for personal use or business not for profits should be judged by courts or arbitration authorities."

The BAIC also held websites accountable for checking the business certification of online sellers. Online business websites were required to keep transaction records for at least two years. Any negligence of uncertified businesses would risk fines for responsible websites ranging from 20,000 yuan (US$2,900) to 500,000 yuan.