China will not let electronic commerce go tax-free, the director of the country's State Administration of Taxation (SAT) has stated, according to an article yesterday from the official Xinhua news agency.
E-commerce is essentially no different from selling in physical stores, and should not be exempted from taxes, said Jin Renqing in an interview with the news weekly Outlook, according to Xinhua.
China will not free e-commerce from taxes because it wants to maintain a neutral tax policy and preserve its tax jurisdiction, Renqing said. The SAT has formed a task force to study the issue, he added.
Although only 16.9 million Chinese use the Internet today and just 14 percent of them regularly make Internet purchases, according to the China Internet Network Information Center, the country of more than 1 billion people is expected eventually to become a major e-commerce market.
E-commerce has raised concerns among tax experts because it can extend the reach of businesses beyond the borders of their home countries. [See "Philippine Internet Law Raises Thorny Issues," July 13.]