Wuhan City Levies Taxes Against Independent Online Stores – Scholars Suggest This Contravenes Tax Law

• Author: Zhang Yi

Online Store “My 1%” is registered with the Dept. of Industry and Commerce of Wuhan City, and their annual turnover in 2010 exceeded 100 million RMB. However, they recently received a fine totaling 430,790,000 RMB from the Wuhan State Taxation Bureau for value added tax, charged with a corporation tax and a late fee for the year of 2010. Wuhan State Taxation Bureau considers the fee valid, arguing that, although China has no concrete regulations on taxation in regards to online stores, according to tax law, any business carried out within Chinese territory is subject to taxation. Additionally, in interviews, it was revealed that the Wuhan Tax Authorities sought back-taxes from four crown grade stores on Taobao. The stores who have achieved the grade of “crown” online have been notified further down the chain to register and declare...