Editor's Note: Since the beginning of 2026, tax authorities in various regions have centrally exposed multiple typical tax-related cases in the online online live streaming industry, with tax risks erupting frequently. In June 2025, the Provisions on the Submission of Tax-Related Information by Internet Platform Enterprises took effect, expressly setting forth the obligation of online live streaming platforms to submit tax-related information and signaling a continued tightening of tax supervision in the online live streaming sector. This article reviews cases from recent years and relevant new tax regulations, examines the typical tax risks faced by various participants in the online live streaming industry, and offers tax compliance recommendations for reference.

I. Typical Tax-Related Cases Involving Various Participants in the Online Online Live Streaming Sector

A. Tax-Related Cases Involving MCN Agencies

Case 1: A Company Fraudulently Obtained Invoices by Misappropriating Online Live Streaming Platform Recharge Information

From 2021 to 2022, Taizhou XX Cultural Media Co., Ltd., in the absence of any actual business transactions with a short-video platform and a online live streaming platform, used other individuals' consumer recharge records obtained from the internet and falsely presented them as its own transactions to apply for VAT special invoices from the two platforms. Among these, 120 invoices had been certified and used to offset VAT of approximately RMB 959,000, and 151 invoices had been booked and recorded as pre-tax cost deductions of approximately RMB 19,251,300. The tax authorities, pursuant to Article 63 of the Law on the Administration of Tax Collection, characterized the conduct as tax evasion and ordered the recovery of approximately RMB 6,288,600 in taxes, imposed a penalty of approximately RMB 4,402,000, resulting in a combined recovery and penalty amount exceeding RMB 10 million.

Case 2: Guangdong XX Cultural Media Co., Ltd. Falsely Issued Invoices

In April 2025, the State Taxation Administration publicly announced a tax-related violation case involving Guangdong XX Cultural Media Co., Ltd. The investigation revealed that the company batch-registered 10 shell companies in the same industrial park in another province, repackaged online live streaming tip revenue as 'information technology service fees,' and falsely issued 1,196 VAT special invoices with a total value (tax inclusive) of RMB 226 million, facilitating the evasion of over RMB 32 million in individual income tax for more than 700 streamers. The company itself underpaid various taxes and fees by approximately RMB 21 million while also fraudulently obtaining over RMB 30 million in funds under local fiscal incentive policies. The tax authorities imposed a tax recovery, late payment surcharges, and penalties on the MCN agency, and 40 suspects have been referred to the judicial authorities.

Case 3: Jiaxing XX Cultural Media Co., Ltd. Illegally Purchased VAT Special Invoices

Jiaxing XX Cultural Media Co., Ltd. provided streamer management services to a online live streaming platform and collected service fees at only 3% to 5% of tip revenue. However, due to the platform's withdrawal rules requiring the company to issue VAT special invoices to the platform for the entire tip turnover, it incurred output VAT liability substantially exceeding its actual revenue. From 2019 to 2022, in order to obtain input invoices to offset its tax liability, the company transferred streamer withdrawal amounts to a flexible employment platform and paid invoicing fees, whereupon the flexible employment platform disbursed the funds to the streamers under the label of 'payment of flexible employment compensation' and concurrently issued VAT special invoices to the company for input tax credit purposes. The court convicted the company of the crime of illegally purchasing VAT special invoices and convicted the flexible employment platform of the crime of illegally selling VAT special invoices.

B. Tax-Related Cases Involving Streamers

Case 4: Peng XX Evaded Tax by Concealing Advertising and Other Income

In January 2026, the Third Inspection Bureau of the Chongqing Municipal Tax Service, State Taxation Administration, lawfully investigated a tax evasion case involving online streamer Peng XX based on tax big data analysis. Peng XX's account had over 30 million followers with average video likes of approximately 1 million, yet his self-reported tax filings over three years totaled less than RMB 1.6 million, grossly inconsistent with his traffic metrics. The investigation found that from 2021 to 2023, Peng XX channeled service compensation received through offline events, music creation, and other channels into personal accounts and, through income concealment, fraudulent filings, and other means, underpaid individual income tax, VAT, and other taxes totaling RMB 2,163,200. The tax authorities lawfully issued a decision requiring recovery of taxes and fees, late payment surcharges, and penalties totaling RMB 4,150,500.

Case 5: Bai X Evaded Tax by Converting the Nature of Income Through an Individual Industrial and Commercial Household

In April 2026, the State Taxation Administration lawfully investigated a tax evasion case involving food-review streamer Bai X based on tax big data analysis. During the period from 2021 to 2024, Bai X had consistently reported substantial business income through an individual industrial and commercial household. However, business registration information showed that this entity had no insured personnel and lacked genuine operating staff. The tax authorities applied a look-through approach and determined that Bai X had, through converting the nature of income, fraudulent filings, and other means, underpaid individual income tax, VAT, deed tax, and other taxes totaling RMB 9,111,800. The tax authorities issued a decision requiring recovery of taxes and fees, late payment surcharges, and penalties totaling RMB 18,912,400.

II. Tax-Related Risks Faced by Various Participants in the Online Online Live Streaming Industry

A. Online Live Streaming Platforms: Falsely Issuing Surplus Invoices and Failure to Fulfill Tax Information Submission Obligations

As the underlying infrastructure of the online live streaming industry, online live streaming platforms face tax risks primarily at two levels. First, the risk of falsely issuing surplus invoices. The end users of online live streaming platforms are predominantly individual consumers, who typically do not request invoices after topping up and tipping on the platform, thereby generating a substantial volume of surplus invoice availability. Certain bad actors exploit this feature by misappropriating consumer recharge records, submitting false Undertaking Letters, and other means to fraudulently induce the platform to issue invoices to third parties with whom no genuine transactions exist. Case 1 exemplifies such a scenario, where the invoice recipient misappropriated others' recharge records to apply for invoicing from the platform. Regarding the issue of falsely issuing surplus invoices, platform enterprises should pay attention to their reasonable verification obligations. Where the platform has fulfilled its reasonable verification obligations, it would be inappropriate to attribute to the platform the fraudulent consequences of a third party's misappropriation of information. However, if the platform acted with gross negligence in reviewing invoice applications, it may face liability. If the platform knowingly issued invoices absent genuine transactions with the applicant, it may face the administrative and criminal risk of being deemed to have falsely issued invoices.

Second, failure to fulfill tax information submission obligations. The Provisions on the Submission of Tax-Related Information by Internet Platform Enterprises, effective June 20, 2025, together with supporting announcements, impose a new statutory obligation on online live streaming platforms: they must submit to the tax authorities, on a quarterly basis, the identity information and income information of platform-based operators and practitioners. Within this framework, online live streaming platforms must establish systems to collect and timely update the identity and income information of resident MCN agencies and streamers, ensuring the authenticity and completeness of the submitted information. Pursuant to Article 10 of the Provisions, where a platform fails to submit information within the prescribed time limit, conceals, falsely reports, or omits information, or refuses to submit tax-related information, the tax authorities shall order rectification within a specified period; if rectification is not made within that period, a fine of not less than RMB 20,000 but not more than RMB 100,000 shall be imposed; where the circumstances are serious, the platform shall be ordered to suspend operations for rectification and a fine of not less than RMB 100,000 but not more than RMB 500,000 shall be imposed concurrently.

B. MCN Agencies: Illegally Reducing Costs Through False Invoicing and Other Means

MCN agencies occupy a pivotal position in the online live streaming industry chain. Because they are required to issue VAT invoices to online live streaming platforms for the entire tip turnover, they incur substantial output VAT liability. Their tax risks are concentrated on obtaining non-compliant invoices through various channels to falsely credit input VAT and inflate cost deductions in order to reduce costs. The principal modes of conduct include: First, establishing shell enterprises to falsely issue invoices. As illustrated in Case 2, the MCN agency batch-registered shell companies in an industrial park in another province, repackaged tip revenue under the label of 'information technology service fees,' and constructed a closed loop of false invoicing, while concurrently exploiting local fiscal incentive policies to extract subsidies. Second, obtaining invoices through flexible employment platforms. As illustrated in Case 3, the MCN agency, compelled by the platform's withdrawal rules to issue invoices for the entire turnover, instead obtained input invoices through flexible employment platforms by paying invoicing fees, in order to offset the substantial output tax liability.

C. Streamers: Reporting Business Income Without Commercial Substance

Under the Individual Income Tax Law, service compensation received by individuals is subject to progressive tax rates ranging from 3% to 45%, while business income is subject to progressive tax rates ranging from 5% to 35% and, in certain regions, historically qualified for deemed assessment with an even lower effective tax burden. This rate differential has driven a large number of streamers to register individual industrial and commercial households or sole proprietorships in an attempt to reduce their tax burden by converting the nature of their income. However, reporting business income requires corresponding commercial substance; otherwise, the tax authorities may apply a look-through approach and reclassify the income as service compensation for tax purposes. Case 5 illustrates this logic: the party concerned had consistently reported substantial business income through an individual industrial and commercial household over an extended period, yet business registration information showed that the entity had no insured personnel and lacked genuine operating staff. On this basis, the tax authorities pierced the registration form and reclassified the income as service compensation. This case demonstrates that, when determining whether income qualifies as business income, the tax authorities will examine factors such as whether there is an independent business premises, whether personnel have been hired, and whether the party bears operating costs and risks—all indicative of commercial substance. Where a streamer continues to accept engagements in a personal capacity, personally completes delivery, and relies entirely on personal labor for income, the income may likely not qualify as business income.

III. Analysis of Tax-Related Liability of Various Participants in the Online Online Live Streaming Industry

A. Administrative Level

1. Administrative Determination and Penalties for Concealing Income and Converting the Nature of Income

Numerous tax-related cases involving online streamers concealing income or converting the nature of income published in 2026 were characterized by the tax authorities as tax evasion, the legal basis being Article 63 of the Law on the Administration of Tax Collection. The aforementioned Cases 4 and 5 both constituted tax evasion. The administrative consequences of tax evasion are: recovery of the unpaid or underpaid taxes, daily late payment surcharges at 0.05%, and a penalty ranging from 0.5 to 5 times the amount of tax unpaid or underpaid.

2. Administrative Determination and Penalties for Falsely Issuing Invoices

Falsely issuing invoices is subject to express characterization and penalty provisions under Articles 21 and 35 of the Measures for the Administration of Invoices. In tax-related cases in the online live streaming industry, since most MCN agencies, after obtaining falsely issued invoices, used them to credit input VAT and deduct from corporate income tax, this concurrently triggers the tax evasion provisions under Article 63 of the Law on the Administration of Tax Collection. Pursuant to Article 29 of the Administrative Penalty Law, where a single illegal act violates multiple legal norms, the penalty shall be imposed pursuant to the provision with the higher fine amount. Typically, the penalty range for tax evasion exceeds that for falsely issuing invoices; accordingly, the characterization of falsely issuing invoices is absorbed by the tax evasion conduct. In practice, tax authorities in most cases handle such matters under the tax evasion provisions of the Law on the Administration of Tax Collection.

B. Criminal Level

1. Tax Evasion Offense and the Administrative Prerequisite

The legal basis for the crime of tax evasion is Article 201 of the Criminal Law. Article 1 of the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases Endangering Tax Collection and Administration (Legal Interpretation [2024] No. 4), effective from March 20, 2024, further expressly enumerates 'concealing income,' 'splitting income,' 'falsely itemizing expenditures,' 'falsely crediting input VAT,' 'fraudulently obtaining tax benefits,' and other conduct as 'deceptive or concealing means' constituting the crime of tax evasion. However, the tax evasion offense features a special regime of administrative penalty as a prerequisite and first-offense immunity: where the taxpayer, after the tax authorities have lawfully issued a recovery notice, has paid the tax due, late payment surcharges, and has been subjected to the administrative penalty, criminal liability shall not be pursued; provided, however, that this does not apply where the taxpayer has been subject to criminal punishment for tax evasion or has been subjected to administrative penalties by the tax authorities on two or more occasions within the preceding five years. Accordingly, criminal prosecution for tax evasion requires the tax authorities' administrative penalty as a prerequisite procedure, and a first-time offender who fully pays the tax due, late payment surcharges, and penalties within the prescribed time limit may be exempted from criminal prosecution.

2. Crime of Falsely Issuing VAT Special Invoices

The legal basis for the crime of falsely issuing VAT special invoices is Article 205 of the Criminal Law. Meanwhile, Article 10 of the Judicial Interpretation [2024] No. 4 expressly enumerates 'issuing VAT special invoices through the fabrication of transaction parties for transactions for which VAT credit is legally impermissible' as a form of false invoicing, addressing the typical technique in the online live streaming platform 'surplus invoice' scenario where invoices that should have been issued to individual consumers are instead issued to enterprises. That article also stipulates that conduct undertaken to inflate performance metrics, secure financing, or obtain loans, without the purpose of fraudulently obtaining tax credits and without causing tax revenue loss, shall not be punishable under this offense, thereby providing a normative basis for excluding liability for the crime of falsely issuing VAT special invoices.

3. Crime of Illegally Purchasing VAT Special Invoices

In Case 3, the court declined to find that the MCN agency had committed the crime of falsely issuing VAT special invoices. The core reasoning was: the MCN agency's payments of tip income to streamers actually occurred, and the MCN agency had a corresponding entitlement to obtain input invoices; therefore, the subjective element of 'the purpose of fraudulently obtaining tax credits' required for the crime of false invoicing was not satisfied. The court simultaneously found, however, that the MCN agency's procurement of invoices through a flexible employment platform by paying invoicing fees constituted the crime of illegally purchasing VAT special invoices. The offense charged in Case 3 carries precedential significance: in cases where MCN agencies obtain falsely issued invoices through third-party channels such as flexible employment platforms, the application of the crime of illegally purchasing VAT special invoices may create room to argue for exclusion from the crime of falsely issuing VAT special invoices.

IV. Tax Compliance Recommendations for the Online Online Live Streaming Industry

Based on the foregoing cases and legal analysis, tax compliance for the online live streaming industry can be approached along two dimensions: ex ante prevention and ex post resolution. The core of ex ante prevention lies in substantiating commercial substance and managing invoice compliance. For streamers, whether income can be characterized as business income hinges on whether the individual industrial and commercial household, sole proprietorship, or other entity genuinely conducted business activities and retained corresponding evidence. Lease contracts, payroll records, cost invoices, social insurance contribution receipts, and similar documentation serve as objective bases for determining whether commercial substance exists. For MCN agencies, where the agency has an employment or service relationship with a streamer and directly pays compensation to the streamer, it must fulfill its individual income tax withholding and remittance obligations. Where the agency manages streamers, pays compensation, and obtains invoices through third-party channels such as flexible employment platforms, it must retain proof that the flexible employment platform actually provided management services, among other evidence. For online live streaming platforms, they should enhance the verification mechanisms for consistency between the invoicing applicant's identity information and the recharge account information, maintain a documentary trail at each stage of invoice review to demonstrate that reasonable verification obligations have been fulfilled, and complete tax information submission in accordance with the Provisions on the Submission of Tax-Related Information by Internet Platform Enterprises.

The emphasis of ex post resolution lies in establishing sound emergency response mechanisms for tax inspections and guarding against corresponding criminal risks. After the tax authorities initiate an inspection, the party concerned should actively cooperate with the tax authorities' inspection efforts and comprehensively organize and preserve evidentiary materials. An internal review should be conducted on the authenticity of the transactions at issue, the legality of the tax treatment, and invoice compliance, so as to assess in advance the potential violations that may be found and the likely direction of characterization, thereby furnishing a factual basis and evidentiary support for subsequent representations and defenses. With regard to the qualitative conclusions to be reached by the tax authorities—particularly core disputes such as the determination of subjective intent in tax evasion and the assessment of the authenticity of transactions underlying invoicing—the party should fully exercise its rights to make representations, present defenses, and request hearings, adequately express its objections and submit countervailing evidence during the administrative proceedings, and strive to resolve qualitative disputes at the administrative stage, so as to prevent adverse characterizations from becoming entrenched before the matter enters criminal proceedings. The foregoing involves professional issues such as the administrative characterization of tax-related conduct, the procedural junctures at the interface of administrative and criminal proceedings, and the evidentiary standards for exculpatory elements. Enterprises may engage third-party professional resources, such as tax attorneys, and develop categorized resolution plans tailored to their own business models and risk profiles, so as to properly resolve tax-related disputes.