China’s eastern e-commerce center, Hangzhou, has imposed massive fines on two popular online influencers for tax evasion, evidencing the increased scrutiny of live-streaming e-commerce and the broader crackdown on the as yet relatively unregulated industry, reports the South China Morning Post. The Hangzhou tax authority fined Zhu Chenhui, known as Xueli Cherie online, and Lin Shanshan RMB 65.5 million and RMB 27.7 million, respectively, for declaring personal wages as income for sole proprietorships.
Under Chinese law, some high earners face higher tax rates than companies. The fines, given out by the Zhejiang Provincial Tax Service, under the State Taxation Administration, show how local governments are taking a tougher stance on the live-streaming industry. For many of China’s 1 billion internet users, live streaming became a popular medium for shopping during the Covid-19 pandemic, turning platforms like Douyin, the Chinese version of TikTok that is also owned by ByteDance, into rivals of more traditional e-commerce platforms like Alibaba’s Taobao.
Both live-streamers work for Hangzhou Chenfan Clothing, founded by Zhu. Company strategist Li Zhiqiang is also being investigated for helping plan and execute the tax evasion, which the statement said was uncovered using big data analysis. Each live-streamer was ordered to pay twice the amount of unpaid taxes in addition to other fines.