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Chinese authorities are raking in more tax from online vendors as part of a crackdown triggered by Beijing’s desire to bolster revenues to compensate for slowing economic growth.

Since a new law came into effect in October, platforms such as Alibaba, Shein and Amazon have been submitting data that indicates merchants’ profits, including names, orders, sales and virtual gifts or digital tokens, according to documents released by local tax bureaus.

More than 7,000 ecommerce platforms had reported tax-related information by the end of the third quarter, said Lian Qifeng, a director of tax for the State Taxation Administration, at a briefing in December.

This had contributed to a 12.7 per cent rise in tax revenues from ecommerce platforms in the third quarter from a year earlier, he said. He did not provide an overall figure.

With China’s economy expanding at its slowest pace in a year in the third quarter, authorities are keen to counter the effects of the US trade war and a lingering property downturn. The collapse of land sales and slowing economic growth have also increased pressure on Beijing to find new sources of fiscal revenue, including from merchants and live streamers on online platforms.

The State Taxation Administration has launched several campaigns to boost collection, including pressing mainland investors to pay taxes of 20 per cent on their global capital gains. It has also curtailed incentives in regions blamed for fuelling industrial overcapacity and launched a nationwide crackdown on evaders who inflated invoices to claim fraudulent rebates.

Online sales of physical goods were Rmb12.8tn ($1.8tn) in 2024, almost 27 per cent of China’s total retail sales, according to data from the national statistics bureau, but analysts say their share of the tax take is often lower. While the submission of sales data has been mandatory since 2019, implementation was lax and the new law sets clear deadlines for submission.

Lian said tax authorities had issued repeated reminders to vendors whose self-declared income was substantially lower than the amounts reported by platforms. That had “significantly narrowed the gap of tax burden between online and offline merchants”, he said.

“Data-driven taxation has become the ultimate weapon in the authorities’ toolbox,” said Quan Kaiming, Shanghai-based partner at Allbright Law Offices, adding that the rise of the platform economy had shaken up traditional tax governance.

The new tax reporting rules helped close the gap, promoting fair competition but also raising compliance costs and data security risks, Quan said. “The tax risks are particularly high for influencers and livestreaming platforms,” he added.

For merchants whose current margins are thin, a higher value added tax — 13 per cent for companies whose sales exceed Rmb5mn — could be devastating.

“This will kill us, everyone. We were not paying any tax before and that’s the biggest benefit of selling online,” said a Quanzhou-based Amazon exporter surnamed Huang, whose online sales of household goods and toys to overseas clients can be as much as Rmb200mn a year.

“Profit margins on Amazon for sellers average around 8 per cent and rarely does anyone exceed 20 per cent,” Huang told the Financial Times. “It is not reasonable at all for cross-border merchants like us to pay a tax as high as 13 per cent.” 

Zeng Jianwei, a Guangzhou-based merchant who sells pet merchandise on Amazon, also voiced concern. “The business is already bad . . . . My sales declined by 20 to 30 per cent [in 2025], and now it’s likely to get even worse.”

Zeng said his strategy was to wait and see. “Maybe after the tax bureau hits its collection quota from larger sellers, they will go easier on us.”

Amy Lin, sales manager at a footwear supplier to Shein, expects most sellers to increase prices. “The ecommerce industry has not been doing too well.” 

Alibaba, Shein and Amazon did not reply to requests for comment.

Additional contribution by Cheng Leng and Tina Hu in Beijing, William Langley in Guangzhou and Rafe Rosner-Uddin in San Francisco