In recent years, with the increasing scale of the Internet economy, the public's demand for audio-visual entertainment has become increasingly rich, giving rise to a huge network entertainment industry. Relying on various live broadcasting platforms, a large number of considerable network anchors realize their personal value on the Internet, and also gain considerable wealth through the audience's reward and live broadcasting with goods. However, some webcasters lack the awareness of tax compliance, fail to fulfill their tax obligations on time and in full, and even adopt various means to avoid or even evade taxes, coupled with the lack of tax supervision when the network entertainment industry has just emerged, resulting in the loss of national taxes, and this kind of problem has already aroused the concern of the State Administration of Taxation and the related departments such as the net information department and the industry and commerce department, and has already exposed many cases of tax evasion by webcasters. Such problems have attracted the attention of the State Administration of Taxation and related departments such as the Internet information department and the industry and commerce department, and a number of cases of tax evasion by anchors have been exposed. Recently, several cases of tax evasion by anchors have broken out one after another around the world. This article analyzes the core issues and "conversion of income nature" in the cases of tax evasion by anchors and points out the tax-related risks and their responses.

I. At the beginning of the new year, the tax authorities have exposed a number of cases of tax evasion by anchors

(I) Suzhou investigated and handled a case of tax evasion by using individual households, involving a "bandwagon" anchor. 

According to the official website of the Jiangsu Provincial Taxation Bureau publicized tax administrative penalty information, Changshu City, a network technology limited company in docking with an e-commerce platform to implement the behavior of hiding income, false listing of expenditures, at the same time, the company also through the establishment of two individual business households, planning to take advantage of the difference between the tax burden underpayment of income tax, and false invoices of webcasting service fees. Through public information, the network technology company is a Taobao anchor of the name of the enterprise, the Taobao anchor in the Taobao live platform now has more than 5 million fans, the volume is huge. In the end, the company was fined up to 2,199,800 yuan for tax evasion. Obviously, the term "utilizing the difference in tax burden" here refers to the nature of converting income.

(II) Xi'an City investigated and dealt with the case of tax evasion by webcasters Jia Ya Ya and Jia Chan Chan. 

In February 2023, the State Administration of Taxation (SAT) exposed the tax evasion case of network anchors Jia Yaya and Gachan Chan, two anchors were fined 176,700 yuan and 185,700 yuan each for underpayment and tax evasion after they earned income from anchoring and failed to file tax returns in accordance with the law. Comparatively speaking, the amount of tax evasion and the volume of anchors in the exposed anchor tax evasion cases are smaller than the previously exposed cases, indicating that the tax authorities have launched an all-round and three-dimensional tax supervision, and the tax audits have begun to include small and medium-sized anchors.

(III) Summary: Observation on the trend of tax-related cases of webcasters

The centralized outbreak of tax-related risks of network anchors is the inevitable way for tax supervision to expand from the real economy to the Internet economy. Earlier, due to the strong hidden nature of the Internet, the income of anchors comes from all over the world, is very decentralized, and is nested in layers through a variety of tax-avoidance arrangements, the traditional tax supervision is unable to investigate and deal with. With the tax authorities gradually adapting to and using informationization and big data means, as well as cleaning up local tax incentives and financial rebate policies, the risk of tax evasion by some anchors has erupted one after another. As far as we can see, the outbreak of related cases has some characteristics:

1. the tax big data has repeatedly made great achievements, and it is difficult to hide the tax-related risks of natural persons. As early as September 2021, the tax authorities announced the case of tax evasion by anchors, which is a clue discovered through tax big data analysis. From the relevant cases, it can be found that the tax authorities have basically grasped the mode of tax evasion by anchors through "splitting income, converting the nature of income", and added its indicators to the early warning system of tax big data. In addition, the tax authorities have established regulatory cooperation with mainstream live broadcasting platforms, for example, Jitterbug issued an announcement in January 2022 urging e-commerce broadcasters to be tax compliant according to the requirements of the tax authorities. 

2. the use of individual business, sole proprietorship enterprises to convert the nature of income determination, there are still ambiguities. This is also a controversial place, that is, the network anchor has been adjusted to the main body of the law for the main body of the business, but still face the risk of "conversion of the nature of income".

At present, with the network anchor tax regulation of the full spread, all kinds of anchor should improve their awareness of tax compliance. At the same time, all kinds of live platforms should also realize the joint liability of tax evasion, and actively prevent it. Accordingly, this article will start from the perspective of anchors and live broadcasting platforms, combined with the current regulations and regulatory trends, to consider the relevant tax-related risks and their compliance paths.

II. The core challenge of tax compliance for broadcasters and platforms: income from production and operation or remuneration for labor services

(I) The ambiguous characterization of live broadcasting activities has become the core of tax-related risks for anchors and platforms.

In the current webcasting activities, there are various modes, and different modes will bring different tax-related risks to the hosts and live platforms, and also affect the selection of tax compliance modes by all parties. In brief, there are labor relationship model, labor relationship model, individual household or individual alone model, company model and MCN model derived from company model.

1. labor relationship model, refers to the anchor and live platform contract, become its anchor, obey the platform's business arrangements, regularly engaged in live activities, from the platform to obtain the base salary and commission. Under this model, the main risk lies in whether the platform withholds personal income tax in full according to wages and salaries, similar to ordinary enterprises.

2. labor relations mode, refers to the anchor has a certain degree of independence, choose to the identity of the natural person stationed on the platform, the anchor decided to carry out live activities, the platform only from the audience's reward to extract a certain percentage of the platform fee, the rest of the reward all paid to the anchor. At this time, the live platform as a party to pay the natural person fees, has a withholding obligation, need to be in accordance with the labor income withholding.

3. individual households or individual alone mode, refers to the anchor set up individual business or individual sole proprietorship enterprise studio, and then in the name of the studio. For the platform, due to the individual businessman or sole proprietor enterprise belongs to the main body of the business, the production and operation income obtained by the production and operation, there is no withholding obligation, do not need to live platform withholding. However, if the nature of the studio is denied, and the income obtained by the anchor belongs to the remuneration for labor, the live broadcast platform becomes the withholding obligor and may face the liability of withholding without withholding. For the anchor, the conversion of the nature of the income is already a tax evasion, and the risk is extremely high.

4. the company model and MCN model, live platform and brokerage company to conduct business between, there is no withholding obligations. The company pays wages and salaries and labor compensation to the anchor, and there is no doubt about it. However, at present, some MCN agencies also exist to join the anchor to register as a self-employed or individual alone, then the question returns to the issue of labor or business income.

In summary, the "conversion of the nature of income" that is, labor income or production and management of income, for the anchor and live platform is a crucial issue. And this problem occurs in the situation, mainly in the case of individual households, individual anchor. The conclusion of this issue will lead to the risk of tax evasion and even tax evasion, which will profoundly affect the tax compliance orientation of the anchor and live broadcasting platform.

(II) Tax-related risks arising from the fuzzy characterization of live broadcasting activities

1. the anchor constitutes the risk of tax evasion

The anchor through individual industrial and commercial enterprises, sole proprietorship enterprises in accordance with the production, business income recognized income, if recognized as "conversion of the nature of income", may constitute tax evasion. That is, the tax authorities believe that the anchor uses the difference in tax rates between tax items to avoid paying taxes and faces administrative penalties. If you do not pay the taxes, late fees and penalties on time, you also face the criminal risk of tax evasion.

2. Risks of live broadcast platforms not fulfilling withholding obligations

The live broadcast platform does not withhold and pay the personal income tax of the anchor and faces the risk of being penalized. Article 69 of the Tax Collection and Management Law states, "If the withholding agent should withhold but does not withhold, and should collect but does not collect the tax, the tax authorities will recover the tax from the taxpayer, and the withholding agent will be fined more than fifty percent of the withholding agent, and more than three times the amount of the tax that should be withheld but does not withhold, and should be collected but does not collect." Therefore, if the live broadcasting platform first paid the anchor according to the operating income, and then was considered by the tax authorities as remuneration for labor, the live broadcasting platform, as a withholding agent, did not identify the anchor's income as remuneration for labor, did not withhold and pay, and may face administrative penalties.

3. the live broadcast platform constitutes the risk of complicity in the crime of tax evasion

In the process of carrying out live broadcast activities, the live broadcast platform and the anchor will make arrangements for the payment of funds and their nature, especially if the live broadcast platform and the anchor recognize that the live broadcast activities belong to the business income, the live broadcast platform does not withhold and pay income tax in accordance with the remuneration for services, and let the anchor issue the corresponding invoices for them. With the outbreak of the risk of tax evasion by the anchor, the live broadcast platform may be affected. Live broadcasting platform for the whole "conversion of the nature of income" behavior knowingly and provide help services, if the anchor fails to pay the full amount of taxes, late fees, fines, there is a criminal risk.

III. Analysis of the characterization of personal income tax for live broadcasting activities

(I) The viewpoint of the General Administration: advertisements and performances using the name and image of the taxpayer are labor services.

The characterization of live broadcasting activities of anchors is controversial between "labor service" and "business income", and there is no clear provision, and the provisions of the Individual Income Tax Law and its implementing regulations are also vague, and there is even a crossover. For this reason, this paper summarizes the other regulations of the General Administration of Taxation for reference. Through the preliminary summary, this paper believes that the General Administration holds the view that advertisements and performances using the name and image of the taxpayer with strong personal attachment should be taxed in accordance with the calculation of wages and salaries or income from remuneration for services.

Accordingly, whether the anchor in the live broadcast "with goods" or to obtain the audience's reward, because the live broadcast activities are highly dependent on the anchor's personal image, name, performance, in accordance with the spirit of the above documents, such activities should be recognized as labor (labor), in the establishment of a labor relationship applicable to the tax items of income from wages and salaries, in the labor relationship applicable to the tax items of income from remuneration for services, rather than production, business income. In the labor relationship, the tax item of income from remuneration for labor services should be applied, rather than the income from production and business. In this context, anchors and live broadcasting platforms face tax-related risks.

(II) Reasonableness Analysis of the Determination of the Operational Nature of Live Streaming Activities

In this paper, based on the current practice of the live broadcasting market and relevant regulations, it should be recognized that the anchor should reasonably adjust its legal form, that is, through the establishment of individual industrial and commercial enterprises and sole proprietorship enterprises, to adjust the income from remuneration for labor services to the income from production and operation, which is not in violation of the provisions of the tax law, and the tax authorities should be recognized.

First of all, both of the aforementioned documents were formulated at too early a date and cannot cover the entire business of webcasting, which is not in line with the current market practice. The act of providing advertisements using the taxpayer's name and image, or the taxpayer's performance is blanket recognized as labor or labor service, which also has certain limitations of the times. This can also be seen from the fact that the above two documents do not provide for the situation of self-employed persons at all. It was not until 2000 that sole proprietorships were explicitly stopped from levying enterprise income tax and investors' personal tax in accordance with the Circular of the State Council on Issues Concerning the Collection of Income Tax by Wholly Individually Owned Enterprises and Partnership Enterprises (Guo Fa [2000] No. 16).

Secondly, the policy actually encourages natural persons to register as market entities, and the establishment of studios facilitates the administrative management of industry, commerce and taxation and the issuance of invoices, which is reasonable and legitimate. Article 16 of the Administrative Measures for Live Webcast Marketing (for Trial Implementation) stipulates that "the live marketing platform shall prompt the operator of the live broadcasting room to register as a market entity or register for taxation in accordance with the law", which in fact makes it clear that the existence of studios has value. The Opinions on Further Regulating the Profit-making Behavior of Webcasting and Promoting the Healthy Development of the Industry" also points out that "enterprises and individual studios operated by webcast publishers shall set up account books in accordance with the relevant state regulations, and in principle, adopt the method of checking and collecting income tax for them", therefore, the policy encourages individual studios to adopt the method of checking and collecting income tax. to declare and pay personal income tax. Since it is to be levied by checking accounts, the studio should be allowed to deduct the costs in the process of operation, and the income from labor remuneration, as a comprehensive income, does not have the function of deducting the costs in accordance with the facts, and only the income from business has such a function.

The blanket recognition of live broadcasting activities as remuneration for labor is not conducive to the anchor to register as a self-employed person. If a live broadcasting activities for a living anchor decided to comply with the business, their studio (whether individual business or sole proprietorship) to general taxpayers, income tax is also for the checking of accounts, but in order to ensure that the risk of "changing the nature of the income" is not violated, but still have to be recognized as remuneration for services income, then it is clear that they have not set up a business, and only the cost is deducted accordingly. Then it is clear that there is no need for the anchor to set up a studio.

Thirdly, the real core problem in the case of tax evasion by anchors lies in the illegal application of local approved collection policy, and the direction of tax supervision should be emphasized on cleaning up the tax pits. On the one hand, clean up the local illegal tax concessions and other policies, and on the other hand, the "Management Measures for Live Webcast Marketing (Trial)" and the "Opinions on Further Regulating the Profit-making Behavior of Live Webcasting and Promoting the Healthy Development of the Industry" both emphasize that live broadcasting platforms should report tax-related information. Through the live broadcast platform to cooperate with the tax supervision, plug the loophole of the studio's illegal application of the approved levy policy is the approved solution to the anchor's tax evasion.

IV. Tax Compliance and Risk Prevention for Live Streaming Platforms and Hosts

(I) Preventing and dealing with the tax-related risks of "conversion of the nature of income".

1. how to prevent and deal with the "conversion of the nature of income" hosts

This article argues that, in the various modes of the current live broadcast, the more ambiguous tax law is the individual or individual studio anchor. Because the anchor studio, with production, business characteristics, this paper suggests that the anchor actively communicate with the tax authorities, in order to apply the production, business income tax items. However, in order to prevent risk considerations, for the anchor name, image of the external release of advertising, performance and other activities obtained live income, or to the remuneration for services recognized as more appropriate, but the studio's other income, such as trafficking in peripheral products, it is normal to production, business income.

If the anchor has previously recognized part of the income as income from production and operation, it should declare tax accordingly, and if necessary, it should open account books and keep all kinds of information. If faced with a tax audit, actively explain to the tax authorities the characteristics of their own business and the legitimacy and value of adjusting themselves to self-employed and individual, and subjectively do not have the intention of tax evasion, and strive not to be recognized as tax evasion.

2. live platform how to prevent the risk of withholding obligation

In addition to reporting tax-related information to the tax authorities, the live broadcast platform also has to fulfill its withholding obligations. However, as mentioned above, there is no withholding obligation if the income is from production and business. Then the live broadcast platform must also consult and communicate with the anchor to accurately identify the nature of the income. The platform must also retain relevant information that identifies the expenditure as business income rather than remuneration for labor. If necessary, it may consider splitting the payment of the anchor's reward expenses through outsourcing or newly established companies to isolate the tax risk.

(II) Self-examination and self-correction to eliminate all kinds of tax evasion and avoidance behavior

Unlike the nature of income, which is a controversial legal issue, some tax evasion behaviors are "nailed on", which anchors and live broadcast platforms should pay attention to prevent. These behaviors include:

1. hidden income, including hidden income through the yin and yang contract, do not declare income without invoices.

2. misrepresentation of costs, for example, live broadcast platforms allow individual households to falsely open invoices for live broadcasting costs, misrepresentation of wages and salaries, and so on.

3. abuse of tax benefits, such as set up in Hainan or Khorgos, but no actual business activities.

4. the live broadcast platform has not fulfilled the withholding obligation according to law.

At present, with the evolving development of tax big data, tax authorities pay close attention to the phenomena of off-the-books operation and huge collection from private households, and carry out timely tax audits. At the same time, the tax authorities also collaborate with the courts, and for civil adjudication issues that may involve taxation, the courts will provide corresponding clues to the tax authorities, thus exposing behaviors such as yin and yang contracts and hidden income. Therefore, both anchors and live broadcasting platforms should strengthen tax compliance and declare and pay taxes in full.

(III) Prevent the criminal risk of tax evasion and actively defend their rights and interests

If the anchor or the live broadcasting platform is administratively penalized for suspected tax evasion, the anchor and the platform should firstly pay the full amount of tax, late payment fees and fines to control the risk at the administrative level, and then initiate administrative reconsideration and litigation against the decision on tax treatment and the decision on tax penalty to safeguard their own rights and interests through the administrative remedial channels. According to Article 201(4) of the Criminal Law, administrative penalties shall be a prerequisite for the crime of tax evasion. However, if the anchor fails to fulfill the administrative penalties, the tax authorities may refer the case to the public security authorities for the crime of tax evasion, which can be sentenced to a maximum of seven years' imprisonment, and the platforms or intermediaries that help the anchor to evade the tax may be held criminally liable for the criminal responsibility of helping the anchor to commit the crime.