Core Insights - In 2025, a significant policy change in China's e-commerce sector will be the implementation of new e-commerce tax regulations, which will have profound implications for domestic platforms and cross-border sellers, particularly those on Amazon China [1][3] Policy Interpretation - The new income declaration rule mandates that e-commerce sellers report income based on the "accrual basis," meaning income must be recognized when an order is generated, not when payment is received. This aims to prevent income concealment through delayed payments [3] - Platform fees such as advertising, logistics, and storage costs can be deducted, but sellers must provide official documentation to support these deductions [4] - The regulatory scope extends to foreign platforms, requiring them to report sales data of Chinese sellers to the Chinese tax authorities, thus eliminating the possibility of avoiding tax obligations through "offshore income" [4] Impact Analysis - Short-term challenges include increased compliance costs for tax obligations, while long-term opportunities may arise from brand upgrades driven by compliance [6] - The new regulations will lead to greater data transparency, with platforms directly connecting to tax systems, increasing the risk of income concealment or expense inflation [8] - Small and medium-sized sellers may face profit pressure due to rising compliance costs, such as hiring accountants or purchasing tax software [8] Practical Guidelines - Sellers should shift their income reporting from a "cash basis" to an "order basis" to align with the new regulations [10] - Expense management should transition from a "loose" approach to a "detailed" one, ensuring all expenses are well-documented and traceable [10] - Tax compliance should evolve from a "reactive" stance to a "proactive" strategy, with sellers actively engaging in compliance measures [10] Policy Background and Trends - The 2025 e-commerce tax regulations are part of a global trend towards tax compliance, influenced by initiatives like OECD's BEPS 2.0 and the EU's DAC7 directive, which require greater tax information disclosure from multinational companies [10] - Future predictions indicate that tax compliance will become a "survival baseline" for e-commerce sellers, with those embracing compliance likely to receive policy support and market rewards [11] Policy Benefits - Small-scale taxpayers can benefit from VAT exemptions on overseas income, provided they fill in the "export exempt sales amount" section [12] - The compliance requirements will help eliminate low-quality sellers, thereby purifying the market and creating opportunities for trustworthy operators [12] - Compliance can enhance consumer trust, allowing sellers to transition from low-price competition to a brand premium model [12] Case Studies and Strategies - A Shenzhen cross-border seller managed to keep tax costs to an 8% increase while boosting customer repurchase rates by 15%, achieving annual sales exceeding 500 million yuan through proactive tax reporting and optimized expense deductions [12] - A Guangzhou seller improved their gross margin from 25% to 40% by transitioning to an independent site, resulting in a 300% increase in net profit in 2024 [13]