China Fines Two Livestreamers $14.6 Million for Tax Evasion

A JD outsourcing livestream company in Beijing on Nov. 9, 2021.Jade Gao/AFP via Getty Images

Chinese authorities fined two top livestreamers a total of $14.6 million for income tax evasion, foreshadowing more scrutiny of the booming sector in the e-commerce industry.

In Hangzhou, the capital city of e-commerce hub Zhejiang Province, Zhu Chenhui was fined $10.3 million, and Lin Shanshan was fined $4.3 million. Both livestreamers failed to report personal income as business income, according to a statement released on Nov. 22 by the provincial tax authority.

Each livestreamer was ordered to pay twice the amount of outstanding taxes in addition to the penalties associated with tax evasion, according to a separate statement released on the same day.

Zhu and Lin apologized publicly for tax evasion later that day, stating that they decided to suspend livestreaming without announcing a potential return date.

Livestreaming marketing has risen in popularity over the past two years among brands such as L'Oreal, Nike, and Dyson, as well as online buyers. Most Chinese e-commerce platforms now offer the option for the purchase and sale of products via livestreaming.

Zhu has more than 15 million followers on Weibo, China’s Twitter-like microblogging network. She was accused of converting personal wages and compensation into the incomes of multiple sole proprietorships that she established in 2019 and 2020, allowing her to evade $4.75 million in tax.

Lin, who has 9.6 million Weibo followers, used a similar tactic to evade $2.05 million in taxes, according to the authorities.

The tax authority said it detected the irregularities through big data analysis. It is also investigating advertising strategist Li Zhiqiang for assisting in the planning and execution of the tax evasion.

“The tax office has used big data and identified other popular livestreamers who may dodge taxes, and these specific instances are under investigation,” the authority added.

Amid the COVID-19 pandemic, watching livestreamers on more traditional e-commerce platforms like Alibaba’s Taobao became a preferred method of shopping for many of China’s 1 billion internet users.

According to livestreaming monitoring outlet Huitun, Zhu is the third most popular livestreamer on Taobao, and Lin ranks sixth.

The penalty case comes two days after Chinese tech giants, including Alibaba and Tencent, were fined by the State Administration for Market Supervision for failing to report 43 prior acquisition deals, citing the anti-monopoly legislation. Each violation carried a fine of $78,000.

Chinese authorities have been restricting the country’s booming internet sector for months, targeting an array of companies over issues from anti-monopoly to data security.

Meanwhile, the ruling Communist Party has been clamping down on major celebrities and online influencers who it has deemed unacceptable.

Earlier this year, prominent actress Zheng Shuang was fined $46 million for tax evasion, barred from social media and appearing on television.