E-Commerce Taxation in China

Abstract

The rapid growth of e-commerce in Chinese markets has presented
great challenges to the Chinese tax system. In response, China started by
applying the existing tax rules on income and value added to e-commerce
but potential tax revenues were lost in this approach. Gradually, China
is introducing special tax norms on e-commerce to close the gap. At
the same time, there has been great progress in using technology in the
administration of the tax system in different developed countries and the
OECD guidelines and experience on the application of the permanent
establishment rule to e-commerce provide a guiding taxation framework,
both of which could potentially contribute greatly to the application of
the Chinese Establishment or Site rule to e-commerce. In studying and
evaluating these rules and creating its own, China could gain from the
theoretical and analytical analysis of the issue and responses, as researched
by the rich academic literature.