Jack Ma

Tax-evading businesses immoral, says Jack Ma

PUBLISHED : Wednesday, 13 November, 2013, 3:17am
UPDATED : Saturday, 16 November, 2013, 3:01pm

Alibaba Group chairman Jack Ma Yun has stirred up a hornet's nest after telling a television interviewer that firms which avoided paying taxes were immoral.

Ma made the comment on a CCTV talk show recorded on the eve of the nation's biggest online shopping day on Monday, when transactions on Alibaba's major retailing platforms - Taobao and Tmall - topped 35 billion yuan (HK$44.5 billion) as discounts fuelled customer demand.

"We support levying tax, and I've always firmly believed that it's immoral if businesses don't pay tax," he said while sitting down with Economics 30 Minutes host Wang Xiaoya.

Ma said infrastructure provided by society at large was essential for businesses to operate and it was only fair that firms paid their share for it through the tax system.

The teacher-turned entrepreneur said it was right that 94 per cent of sellers on Taobao did not pay tax as their annual sales revenue was below the 240,000 yuan tax threshold.

"But those 6 per cent who do need to pay taxes are being watched by too many organisations whose only job is to check on sellers whenever they are doing well in sales," Ma said.

Analysts widely expect the central government to begin imposing a sales tax of up to 5 per cent on the mainland's online vendors, cashing in on sales they reckon were worth about 1.3 trillion yuan last year and are forecast by Bain & Co to be almost three times that by 2015.

The government has yet to do so, but industry experts believe it is only a matter of time before it happens.

It was not the first time Ma has commented on the thorny issue of taxing Taobao sellers, many of whom run mom-and-pop shops online with a low profit margin. In a CCTV programme aired in June, Ma rejected the notion that Taobao sellers make a living by evading taxes.

"I am confident that Taobao sellers will continue to create miracles even if all of them are asked to pay taxes," Ma said. "They didn't succeed because they evaded taxes, they succeeded because of their creativity."

Many in the online community disagreed with Ma and said they were disappointed by his comments. They said corruption scandals showed that taxes were not being properly used.

"It would be immoral if they do pay taxes, since they would be funding corruption," said a Shenzhen blogger.

"It's okay to pay taxes, but who can monitor the usage of the tax once it's collected?" asked another blogger, urging for a transparent political system.

While business analysts predicted that a large number of micro-scale online shops would fold when they were eventually forced to pay tax, shoppers were worried that rising costs would eventually be transferred to the price of the products they purchased.

"It will be us who are footing the bill in the end," wrote a blogger.

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