Cross-border e-commerce is a key track for the transformation and upgrading of my country’s foreign trade, stabilizing the fundamentals of foreign trade, helping small and medium-sized manufacturing companies go overseas, and revitalizing the production capacity of the domestic real economy.
After more than 20 years of development, it has become an indispensable core component of my country’s export of goods, carrying the important mission of survival of millions of small, medium and micro enterprises, stabilization of the foreign trade industry chain, and layout of overseas market share.
Recently, with the full implementation of the fourth phase of the Golden Tax, major overseas cross-border e-commerce platforms have pushed full operating data to the domestic tax authorities, and industry supervision has shifted from the previous loose model to full data penetration and strict supervision.
However, the current domestic cross-border e-commerce still uses the traditional general trade tax collection and management system, which takes the traditional entity trade “invoice-controlled tax, full sales tax calculation, and complete input deduction” as the core collection and management logic, completely ignoring the industry’s inherent business model and objective operating pain points that have been formed since the birth of cross-border e-commerce.
my country’s cross-border e-commerce has grown since 2005 –
It officially emerged in 2006. In the early days, it mainly focused on the supply of street stalls and fragmented small commodities overseas. It is a typical market-oriented product of a non-planned economy.
Most of the upstream suppliers in the industry are individual workshops, small processing plants, and offline distribution and wholesale markets. Such suppliers are small in size, have scattered orders, low single supply amounts, extremely high invoicing costs, and no compliant invoicing capabilities.
Up to now, nearly half of the cross-border e-commerce sellers in Shenzhen, the core cross-border e-commerce industry gathering place in the country, are unable to obtain VAT input invoices normally. Purchases without invoices and exports without invoices are not subjective and malicious tax evasion by companies, but are inherent and long-term objective operating conditions of the industry.
Currently, the cross-border e-commerce industry is experiencing serious internal vicious involution, with low industry entry barriers and widespread sellers’ homogeneous distribution of goods. They have long relied on low-price competition to seize overseas markets. Not only do peers lower prices for each other, but they also greatly squeeze the living space of traditional foreign trade companies, causing the overall profits of the entire foreign trade industry to continue to decline.
Moreover, platform fees are high, and actual repayments are far lower than book sales. Mainstream cross-border platforms such as Amazon will deduct high commissions, overseas warehousing fees, logistics distribution fees, platform advertising fees, return loss fees and many other expenses. Sellers can only get actual repayments of about 48% of book sales, and the problem of inflated book revenue is prominent.
In addition, the ability of enterprises to resist risks is extremely poor. After a long period of low prices, the overall net profit of small and medium-sized cross-border e-commerce sellers has only remained at 3% – 5%. They have no profit buffer space and cannot bear the pressure of new tax costs, historical tax repayments and late fees.
There are many core contradictions between current tax policies and industry formats.
The tax calculation caliber is completely unreasonable, and the tax burden is seriously inflated. The tax department calculates the tax base based on the platform’s full book sales, ignores the platform’s hard deductions and refund amounts, and does not recognize the seller’s actual net collection income. Moreover, overseas platforms cannot issue compliance fee deduction invoices to domestic sellers, and sellers cannot make input cost deductions. As a result, companies pay taxes at an amount that far exceeds actual revenue, doubling the tax burden.
The invoice-controlled tax system fundamentally conflicts with the industry’s original model. The domestic tax system requires companies to have complete VAT input invoices. Exports without invoices are regarded as domestic sales and require full payment of VAT and surcharges. However, the upstream supply chain of cross-border e-commerce naturally lacks invoicing capabilities. The traditional tax system is not suitable for the fragmented B2C retail overseas model of cross-border e-commerce.
In order to solve these problems, it is necessary to combine the objective current situation of the industry, the needs of national fiscal and tax collection and administration, and the bottom line of foreign trade safety, adhere to the four principles of seeking truth from facts, flexible transition, classified supervision, and adaptation to new business formats, and take into account national tax security and the survival and development of the industry.
Optimize top-level tax policies, establish an exclusive collection and management system for cross-border e-commerce, unify tax calculation standards, use actual net repayments as the tax base, fully implement and relax the no-invoice tax exemption policy, set up a two-year compliance buffer transition period, prohibit traceability of historical stock business, and take the lead in coordinating overseas platforms to issue compliant deduction invoices.
Optimize the supervision and enforcement methods, implement classified and precise supervision, distinguish malicious tax evasion companies from small and medium-sized sellers operating in compliance, accurately crack down on illegal activities, and provide compliance guidance to small, medium and micro sellers who are operating normally.
To guide the transformation and upgrading of the industry and get rid of the dilemma of low-price involution, the government takes the lead in guiding the cross-border e-commerce industry from a low-price distribution model to a high-quality, branded overseas model, encourages enterprises to deploy independent stations, operate multiple platforms in parallel, and improves supporting financial and taxation services for the industry.
The current operating difficulties of cross-border e-commerce are not caused by malicious tax-related violations by enterprises, but by structural contradictions caused by the mismatch between the traditional tax system and new foreign trade formats, and the failure of regulatory policies to meet the objective realities of the industry.
Cross-border e-commerce plays an important role in stabilizing exports, stabilizing employment, and stabilizing the industrial chain. It is related to national trade security and the stability of the real economy.
We urge higher-level regulatory authorities to fully consider the inherent business formats formed by the industry’s two decades of development, suspend the one-size-fits-all taxation policy, and introduce exclusive tax collection and administration rules that adapt to the characteristics of the cross-border e-commerce industry. Through flexible supervision during the transition period and differentiated tax calculation methods, we can achieve a win-win situation for national tax security, stable foreign trade exports, and healthy development of the industry.
