Online sellers fear electronic receipts will lead to taxation

Chinese online retailers fear the trial scheme will lead to levies but government says the new measure will help them reduce their costs

PUBLISHED : Friday, 05 July, 2013, 12:00am
UPDATED : Friday, 05 July, 2013, 5:27am

The trial use of electronic receipts at a leading online retailer has triggered concerns the mainland is one step closer to imposing a tax on the e-commerce sector, a blow to small sellers on the internet.

However, the tax bureau denied the new measure was aimed at charging tax on online sales, saying it was expected to simplify the procedures for tax bureaus to issue receipts and help retailers reduce their operational costs.

The State Administration of Taxation and three other government departments have said they would issue electronic receipts to consumers who shop on 360buy.com

Consumers can choose to either download an electronic receipt or ask for a written one to be delivered with the products after they complete the purchases online. They are entitled to after-sales service with either receipt.

So far, electronic receipts are only applicable to consumers in Beijing who buy books or audio-video products on 360buy.

The trial scheme will be expanded to other product categories and retailers, including Suning.com in the near future.

A senior executive of 360buy was quoted by the media as saying that the use of electronic receipts would save the company millions of yuan a year.

360buy, formed in 1998, is one of the largest online retailers in the country. It says on its website it had a 22.7 per cent share of the business-to-commerce market in the first quarter of last year.

The company has 51 million registered users and 8,000 suppliers. The number of orders per day exceeds 500,000.

Feng Lin, an analyst with China e-Business Research Centre, said electronic receipts would be an important tool to help the government impose tax on online retailers in future.

"Now a large number of small sellers on Taobao.com and other shopping sites do not pay any tax on their sales revenue. But this would be hard to avoid if the authorities track their transaction information through electronic receipts one day," said Feng.

Industry statistics show that sales on the mainland online retail market reached 1.3 trillion yuan (HK$1.64 trillion) last year, accounting for about 6.3 per cent of total retail sales for the year.

The Ministry of Commerce said earlier this year several government authorities had started research work on how to charge tax in the e-commerce sector, although no detailed measures had been formulated yet.