E-traders need tax incentives

An undated photo shows an advertisement for e-commerce retailer JD.com Inc in Shanghai. [Photo/China Daily]

At a recent meeting co-chaired by the State Administration of Taxation and the All-China Federation of Industry and Commerce aimed at deepening the country's tax reform to boost the development of private enterprises, Liu Qiangdong, CEO of JD.com, China's second-largest e-commerce company, called for small e-commerce companies to be granted the same preferential tax reductions or exemptions as those given to small- and micro-sized enterprises.

There has long prevailed a viewpoint among some that a lingering slump in China's real economy is largely caused by the boom in e-commerce and that e-commerce operators basically pay no taxes. However, the fact is that all registered enterprises, either online or offline, have to pay taxes in China. Due to their more explicit and traceable electronic trading records and more standardized transaction procedures, e-commerce enterprises actually find it much more difficult than bricks-and-mortar retailers to evade taxes.

Small enterprises, both online and offline, are active players in China's economic activities and they overlap in most cases at a time when the internet has penetrated into every aspect of people's lives. If online enterprises are denied the special preferential tax policies given to small enterprises offline only because of their online trading channel, it would be in contravention of the authorities' policy of encouraging "mass entrepreneurship and innovation".

To facilitate mass entrepreneurship and innovation, both bricks-and-mortar enterprises and e-commerce outlets should be encouraged to become active participants. The imposition of heavy taxes on e-commerce operators will not only likely throttle some innovative projects, but also restrain the country's economic vitality and compromise its overall economic development.

While extending preferential tax policies to small- and micro-sized enterprises, the country should not differentiate between online and offline enterprises. Any different treatment is neither reasonable nor fair.

(Southern Metropolis Daily, China Daily)