China is building a “data-first” tax system. Platforms are the new tax rails.
China’s tax story for 2025–2026 is not just “more enforcement.” It is a structural upgrade: turning the country’s biggest digital platforms into the reporting backbone of the tax system, while the invoice layer goes fully digital and the VAT framework gets codified into a formal law.
For retailers, marketplaces, POS vendors, and cross-border e-commerce players, the message is clear. China is moving from a world where compliance could be handled locally and manually, into a world where compliance is embedded in data flows: identity, transactions, invoicing, and reporting; at scale. Done well, this creates a more predictable market and fairer competition between online and offline commerce.
The centerpiece: platforms must report seller income, quarterly, at scale
In June 2025, China issued State Council Order No. 810, the “Regulations on the Reporting of Tax-Related Information of Internet Platform Enterprises.” (fgk.chinatax.gov.cn)
It formalizes a national system that requires internet platform enterprises to report tax-related information, and it took effect upon promulgation.
In practice, this means platforms operating in China must report information that tax authorities can use to match business activity to real identities and real income. Critically, this scope does not stop at domestic players. Major professional analyses highlight that offshore (non-resident) platform operators providing profit-making services in China are explicitly included, which matters for cross-border e-commerce and global tech providers that touch Chinese sellers or Chinese consumers.
The strategic intent is easy to understand: if a large share of small merchants, livestreamers, and “micro-businesses” earn income through platforms, then platforms are the only place where the tax system can see the full picture, at reasonable cost. A public signal of scale arrived later in 2025. China’s State Taxation Administration said more than 7,000 domestic and overseas online platforms had already submitted tax-related information under the reporting rules. (China Daily)
Enforcement is rising because the fiscal math matters
The Financial Times framed this as part of a broader effort to strengthen fiscal revenues. It reported that tax authorities intensified a crackdown on online vendors, and that the new data-driven approach is already showing results, including a reported 12.7% year-on-year increase in tax revenues from the sector by the third quarter. (Financial Times)
That FT lens matters for business leaders because it explains why this is happening now. This is not a temporary campaign. It is a shift in governance: tax collection is becoming more automated, more data-backed, and harder to avoid, especially for merchants who have grown quickly inside digital ecosystems.
For compliant businesses, that is not bad news. It tends to reduce the “grey advantage” of competitors who underreport. It also makes the market more investable: when rules are enforced consistently, serious players can plan.
The invoice layer: China’s e-fapiao engine is becoming the default operating system
Parallel to platform reporting, China has been industrializing its invoicing infrastructure. Fully digital electronic invoices (often referred to as fully digitalized e-fapiao) have been rolled out nationwide, with the broader direction being clear: from availability to standardization to near-universal adoption. (China Briefing)
From a retail technology viewpoint, invoicing in China is not a “nice-to-have.” It influences how POS, ERP, tax engines, returns, and reconciliation must work, especially when operations span stores, marketplaces, and last-mile delivery models. When invoices become fully digital and widely enforced, manual workarounds stop scaling. Systems must be integrated.
This is where many international retailers get surprised: in China, invoices are not merely documents. They are data objects, often used in enforcement, fraud detection, and audit logic. Getting the invoice flow right is not a back-office task; it becomes part of the customer experience, the returns process, and the finance truth.
The legal foundation: China’s first formal VAT Law takes effect in 2026
China is also upgrading the legal architecture itself. A new VAT Law is set to take effect on January 1, 2026, refining VAT rules and clarifying how taxation should work across modern business models. (China Briefing)
For global e-commerce and digital services, one detail stands out: Article 15 and its handling of cross-border VAT withholding responsibilities. In simplified terms, it places withholding responsibility on the buyer unless an overseas seller uses a domestic representative, an approach that signals both pragmatism today and the possibility of tighter registration expectations tomorrow. (Fiscal Portal)
For retailers and vendors expanding into China, this matters in two ways. First, it affects how you structure cross-border flows and which party carries VAT obligations in certain models. Second, it reinforces the broader direction: China wants clear accountability in tax chains, and it will keep narrowing the space for ambiguity.
Smaller “tells” that signal a bigger direction
Even the more specialized updates point in the same direction: a VAT system that is becoming more codified, more data-driven, and more aligned with how commerce actually happens.
One example is the way VAT rules and clarifications are being applied to specific sectors such as the gold market, showing the tax system’s growing comfort with targeted adjustments where enforcement and definitions matter. (Fiscal Portal)
Another example is the discussion around VAT credits and rebates, which, while technical, has real operational meaning for businesses because it touches cash flow, documentation discipline, and the quality of invoice data in the chain. (Fiscal Portal)
And then there are the rules around “place of consumption” for certain services and rentals, which matter more than many teams expect, because they touch the tax logic of digital-first and cross-border operating models.
What this means for retailers and POS/e-commerce vendors entering China
China is not “making tax harder” for the sake of it. China is making tax more visible. Platforms become reporting rails. Invoices become digital objects. VAT becomes more clearly codified. For companies that build properly, process + system + data, this creates a more stable operating environment.
Retailers should treat China entry (or expansion) as a compliance architecture project, not a checklist. The key questions are no longer only “Are we issuing the right receipt?” but also: “Can we prove identity and income flows where platforms are involved?” “Is invoicing integrated with POS and returns?” “Do we have clean master data for products, entities, and locations?” “Can we produce audit-grade reporting without manual heroics?”
POS and e-commerce vendors, especially those selling to international retailers, should recognize the strategic opportunity here. The market will reward solutions that can do three things well: integrate deeply, automate reliably, and explain compliance in plain language to operators who have real stores to run.
China is building a tax system designed for the digital economy it already has. The companies that align early will not only reduce risk, they will move faster.
Sources used (selected)
Fiscal Requirements news: China Mandates Real-Time Digital VAT Invoicing (Dec 2025). (Fiscal Portal)
Fiscal Requirements news: China Enacts First Formal VAT Law, Effective 2026 (May 2025). (Fiscal Portal)
Fiscal Requirements news: China – Place of Consumption rule update (page). (Fiscal Portal)
Fiscal Requirements news: China – VAT credit/rebate update (page). (Fiscal Portal)
Fiscal Requirements news: China – VAT rules affecting gold market (page). (Fiscal Portal)
State Taxation Administration / ChinaTax (official): State Council Order No. 810 (June 20, 2025). (fgk.chinatax.gov.cn)
EY tax alert on platform reporting scope (domestic + offshore). (EY)
China Daily (STA statement on 7,000+ platforms submitting data). (China Daily)
Financial Times summary snippet (crackdown context; 12.7% YoY increase reference). (Financial Times)
China Briefing (VAT Law overview; e-fapiao rollout background). (China Briefing)