Recently, the State Internet Information Office, the State Administration of Taxation, and the State Administration of Market Supervision and Administration jointly issued the "Opinions on Further Regulating the Profit Making Behavior of Webcast to Promote the Healthy Development of the Industry", which requires "to strengthen the normative guidance of the profit making behavior of Webcast, encourage and support the lawful and compliant operation of Webcast, and promote the development of the Webcast industry in a standardized and standardized manner." That is to say, This year is the year of compliance for the online live streaming industry and the year of regulation and regulation of the platform economy. From last year's online celebrity anchors Sydney, Lin Shanshan, and Wei Ya to this year's online anchor Ping Rong (net name: Lv Sister-in-law Ping Rong), multiple online celebrity anchors have been investigated for tax evasion, causing widespread discussion and attention from all sectors of society. This undoubtedly signals that the platform live streaming industry should strengthen tax compliance construction. In this article, we will discuss the tax risk points of the online live streaming industry and the key points of tax compliance management.

1、 Tax Risk Points in the Webcast Industry

（1） Inappropriate distinction between the nature of network anchor revenue

In the online live streaming business, there are several types of income for anchors, namely, reward income for users watching live streaming, shared income from bringing goods, "salary" income from signing up with brokerage companies or live streaming platforms, and endorsement income for merchants. When making tax returns for different types of income, it is necessary to distinguish between the nature of the income, which can easily lead to tax risks due to incorrect declaration of the nature of the income.

1. Confusing labor remuneration income with business income

According to Article 6 of the Regulations for the Implementation of the Individual Income Tax Law, business income refers to income derived by individual businesses, sole proprietorship enterprises, and partnership enterprises engaged in production and business activities, individuals engaged in paid service activities such as running schools, consulting, and individuals engaged in other production and business operations. "Income from remuneration for labor services" refers to income derived by individuals from engaging in labor services.

Formally, when an anchor provides independent services for a platform or brokerage institution in his personal capacity, the income obtained is the income from labor remuneration; The anchor establishes individual businesses, sole proprietorship enterprises, and partnerships to engage in production and business activities, and the income obtained is business income. However, based on the judgment of business content and economic essence, the boundary between labor remuneration and business income is not clear. Is it possible for the live broadcast income of the anchor not registered as an individual business to constitute operating income? In situations where the anchor has been registered as a self-employed business, is it possible for his or her income to constitute income from labor remuneration? These are the most controversial issues in practice. From the exposed cases of online celebrity anchors Sydney, Lin Shanshan, and Weiya, it can be seen that all three anchors have registered companies and have signed contracts in the name of the company, but their income nature still belongs to income from labor remuneration. Therefore, in terms of the qualitative nature of the income, it is necessary to deeply explore the essence of the transaction to solve tax risks.

2. Confusing income from labor remuneration with income from wages and salaries

"There is no labor relationship between individuals and payment entities, which is the key to distinguishing between wages, salary income, and labor remuneration income." Although after the establishment of a comprehensive and classified personal income tax system in China, both labor remuneration income and salary income are subject to a comprehensive income tax rate, the withholding tax rate for labor remuneration income is higher, and a certain proportion of additional expenses are allowed to be deducted. At the same time, whether the relationship between the anchor and the platform is a labor relationship or a labor relationship also has significance for the collection of value-added tax, which determines whether the anchor should pay value-added tax for the remuneration received from the platform and by what tax item. Therefore, it is necessary to judge whether the nature of the contract signed between the network anchor and the live broadcast platform or brokerage company is actually a labor contract or a labor contract, and further distinguish between the anchor's income and labor remuneration or salary.

（2） The platform transfers the tax declaration work to a third party, and the anchor bears the tax risk of false declaration

If the network anchor obtains business income, it should report it on its own according to current laws and regulations; If it is recognized as income from labor remuneration or wages and salaries, it is necessary for the payer to fulfill the withholding obligation.

In practice, the contract between the network anchor and the platform simply stipulates that "the network anchor's income is after-tax income, and the platform has the obligation to withhold and pay taxes.". In fact, in order to simplify the management process of tax declaration for network anchors, the platform often transfers tax declaration and other work to a third party. This method is prone to two risks. First, if it is business income, it should belong to the anchor's own declaration. Once the third party entrusted by the platform fails to truthfully declare on schedule, the legal risk will ultimately be borne by the anchor; Secondly, if it is income from labor remuneration, and third-party platforms declare it as operating income, it is very easy for anchors to be characterized as "tax evasion in the nature of conversion income.".

（3） Abuse of approved collection policies is common in the online live streaming industry

Network anchors usually adopt the following methods to reduce the tax payable: first, establish commercial entities such as individual businesses or sole proprietorships; 2、 Apply for the approved collection policy of the park in the name of the entity; 3、 Signing a cooperation agreement with the commercial entity; 4、 Pay the anchor's personal income tax according to the approved tax amount. The exposure of several online anchor tax violations has demonstrated the abuse of the approved collection policy and has been heavily investigated by tax authorities.

However, starting from 2022, with the extensive inventory and strict supervision of approved tax collection by local tax authorities, the subsequent abuse of approved tax collection policies in the online live streaming industry will be alleviated.

（4） The behavior of converting the nature of income has become the focus of tax big data

From the perspective of several exposed cases of tax evasion by online anchors, there is a significant risk that anchors can be characterized as tax evasion by reducing their tax burden by transforming the nature of their income in the online live streaming industry.

The maximum marginal tax rate on wages, salaries, and labor remuneration is 45%, while the maximum marginal tax rate on operating income is only 35%. In addition, operating income can also deduct operating related costs. If combined with the use of approved collection policies, the actual tax burden is only around 6%. According to the currently exposed cases, based on the principle of substance over form, the tax authorities have made a negative evaluation on the behavior of broadcasters using individual proprietorship enterprises to convert labor remuneration into business income. Therefore, the online broadcast industry should pay special attention to this risk point.

2、 Key Points of Tax Compliance in the Webcast Industry

Based on the risk points analyzed above, we will correspondingly elaborate the following key points of tax compliance construction:

（1） Participants in the webcast industry should clarify the nature of revenue

1. Network anchors provide services to platforms or brokerage institutions, and the income obtained is the income from labor remuneration

When providing services for a platform or brokerage institution in a personal capacity, the income obtained by the network anchor is the income from labor remuneration. It is important to distinguish the nature of the contract signed between the network anchor and the platform or brokerage institution.

2. Online anchors are employed by platforms or brokerage agencies, and the income they receive is from wages and salaries

According to Article 6 of the "Regulations for the Implementation of the Individual Income Tax Law", income from wages and salaries is income derived by individuals from their employment or employment. If a network anchor enters into a labor contract or employment relationship with a platform or brokerage institution, the income earned by the anchor from the platform or brokerage institution can be characterized as salary income.

3. Network anchors engaged in production and business activities in the name of commercial entities may not necessarily be classified as business income

When network anchors register individual businesses, sole proprietorships, and partnerships to engage in production and business activities, the income they receive from providing services to platforms or brokerage institutions is business income. However, the essence of business income is income derived from production and business activities, which is not entirely premised on registered commercial entities. Based on the judgment of business content and economic essence, even if an individual business or sole proprietorship enterprise is registered, if all activities are conducted in the name of an individual, or if the activities are conducted in the name of a commercial entity, but the income and costs are unrelated to the registered commercial entity, it may not be recognized as operating income.

（2） Specify the withholding agent, and the webcast platform should be cautious in using third parties to assist in the declaration

The "Opinions on Further Regulating the Profit Making Behavior of Webcast to Promote the Healthy Development of the Industry" released yesterday clearly requires that "Webcast platforms and webcast service institutions should fulfill their individual income tax withholding and payment obligations in accordance with the law, and should not transfer or evade their individual income tax withholding and payment obligations, and should not plan or assist webcast publishers to implement tax evasion. Therefore

1. When a live broadcast platform or brokerage institution directly pays salaries or labor remuneration to the host, the live broadcast platform or brokerage institution is the legal withholding agent.

2. When a network anchor registers a self-employed business or sole proprietorship enterprise, a live broadcast platform, or a brokerage institution to directly pay the corresponding amount to it, the payer has no withholding obligation, and the taxpayer shall declare it on its own.

（3） Enterprises and individual studios run by webcast publishers should set up accounting books, and in principle, income tax should be collected through audit

As mentioned above, there is a practice of abusing the approved tax collection and evading tax payment in the online live streaming industry. The Opinions on Further Regulating the Profit Making Behavior of Online Live Broadcasting and Promoting the Healthy Development of the Industry, released yesterday, has clearly stated that "enterprises and individual studios run by online live broadcasting publishers should set up accounting books and, in principle, adopt the method of auditing and collecting income tax." Therefore, participants in the online live streaming industry, Attention should be paid to setting up Zhang Bo and adopting the tax collection method of auditing accounts.

3、 Key Points for Tax Lawyers to Conduct Tax Compliance Construction for the Webcast Industry

The compliance construction of the webcast industry should closely follow the risk points in the application and collection and management of personal income tax for webcasts, the main business models of webcasts, the sorting out of relevant laws and regulations, tax declaration guidelines, legal responsibilities, and other aspects.

（1） Identify corporate tax risk points

By conducting an inventory of the tax treatment patterns of the enterprise in the past three to five years, the tax risk points of the enterprise were identified.

（2） Sort out the legal relationship between the "anchor platform brokerage" in the enterprise, so as to correctly handle the qualitative analysis of income

Identify the legal relationship between the two parties through the nature of the contract between the anchor, the platform, and the brokerage agency to prevent confusion between wages and salaries and labor remuneration. If an enterprise has made an error, assist the enterprise in making tax adjustments. If it involves making up tax payments, assist the enterprise in communicating with the tax authorities and conducting self inspection to make up tax payments.

（3） Provide professional guidance on tax related laws and responsibilities for enterprise personnel

Summarize laws, administrative regulations, departmental rules, normative documents, and judicial interpretations related to the online live streaming industry, covering not only the tax law fields such as personal income tax and tax collection management, but also other relevant laws such as the Civil Code, Commercial Law, and Labor Law. In addition, it is also necessary to help practitioners in the online live streaming industry fully understand the potential risks in daily accounting processing and tax declaration, and regularly assist enterprises in self checking whether account book settings, bookkeeping methods, and tax processing are compliant.

（4） Establish tax declaration guidelines for enterprises

The establishment of tax declaration guidelines for enterprises mainly includes the selection of main forms, declaration of income types, withholding obligations, and declaration procedures to ensure the legal and compliance of enterprise tax declaration procedures.