China Trading Desk
Crackdown on e-commerce click farming
In June 2020, China State Taxation Administration carried out unannounced inspections of online stores on multiple e-commerce platforms like Taobao, Tmall, JD, etc. Owners of online stores are required to repay taxes and corresponding late fees for the three years from 2017 to 2019 as per Alipay transaction credit (all transaction amounts in the store). In other words, the store owner also needs to pay taxes for false transactions (clicks farming).
One of the major difficulties is that the turnover is difficult to accurately grasp and the lack of transparency of the data. Today, the tax department obtains online sales data through big data technology, and strengthens cooperation with the platform to obtain complete e-commerce platform data, deepens cross-system and cross-industries for tax cooperation, and shares information resources among multiple departments. This analysis finally found that several businesses have under-reported revenue between 2017 ~ 2019 and forced to declare the sales revenue and sales of E-commerce platform stats income differences. Many E-commerce merchants have received prompts issued from the tax department, and asking them to make up for the tax for “Click farming”.
Clicks farming is a way to inflate their transaction volume, create false ratings, reviews. This creates more popularity to attract customers, which is a fake transaction. The government's measures have caused mad "clicks farming" e-commerce owners to suffer heavy losses. On the other hand, the China State Taxation Administration will take advantage of big data, and optimize the new tax management model, and crackdowns on fake transactions, which will maintain the order of the e-commerce market.