SHANGHAI–Hangzhou tax authorities have slapped a total of 93.2 million renminbi, or $14.6 million, in fines on two top Chinese livestreamers for tax evasion.
Zhu Chenhui, better known as Cherie, and Lin Shanshan, who goes by the name Sunny, were found to have both misreported personal income as business income, evading more than $6.8 milion in taxes. Cherie was fined 65.5 million renminbi, or $10.2 million, while Sunny was fined 27.7 million renminbi, or $4.3 million. Cherie is an influencer that often jostles with Austin Li and Viya for the top three spots in livestreaming.
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Between 2019 and 2020, the two, in separate cases, were determined to have used sole proprietorships set up across Shanghai, Guangxi, Jiangxi and other cities to report their personal income as income of their businesses. Individual salary tax rates can be as high as 45 percent in contrast to income earned by individuals from privately-owned business which is taxed at rates no higher than 35 percent. Moreover, China doesn’t levy business income tax on sole proprietorships.
Authorities said that big data had led to the investigation and that the fine, including back taxes, was lenient due to the influencers’ cooperation with the audit and their voluntary payback of partial tax before the cases were closed.
Similar tactics were used by actresses Fan Bingbing and Zheng Shuang before they were fined a hefty $129 million and $46 million, respectively, by the government.
A KPMG and Ali Research Institute report estimated that China’s livestreaming economy crossed the one trillion renminbi threshold and contributed 8.6 percent of total retail sales in 2020. According to data from the Chinese Ministry of Commerce, more than 10 million e-commerce livestreams took place in the first half of 2020 alone.
Despite the high earnings of the very top livestreamers, a report last year from the China Association of Performing Arts found that there were a total of 130 million registered livestream accounts in the country with most hosts earning just 3,000 to 5,000 renminbi a month.