Cross-border e-commerce sellers are facing increased tax scrutiny as many report receiving secondary verification requests from tax authorities. The notices highlight discrepancies between third-quarter VAT declarations and platform-reported data, with stricter wording that has caused widespread concern in the industry.
Escalating Tax Warnings Create Industry Anxiety
On November 5, multiple cross-border sellers reported receiving tax risk notification messages from authorities. The messages indicated that declared VAT sales revenues for Q3 fell below income figures reported by e-commerce platforms to tax agencies, requiring sellers to verify and correct any discrepancies.
"We just got one at the end of October, and now another so soon—we don't know how to respond," one seller expressed in an industry forum. Similar concerns have flooded social media platforms, with many sellers uncertain about proper tax filing procedures.
"My heart raced when I saw the message—we can't identify the issue, and our accounting team is confused," shared a Shenzhen-based seller.
A Guangzhou seller raised concerns about data discrepancies: "Our third-party ERP system shows different numbers from Amazon's backend, but tax authorities take platform data as authoritative. This seems unfair."
Key Concerns: Revenue Reporting, Expense Handling, and Tax Categories
Seller concerns primarily focus on three areas:
Revenue reporting standards: Should declarations use gross sales figures or actual payment amounts received?
Platform fee documentation: How should sellers handle various platform fees that lack official invoices?
Tax category clarification: Which taxes apply—VAT, corporate income tax, or others?
Expert Analysis: Accurate Reporting Remains Paramount
Industry expert Huang Min, founder of Hongzhicheng Consulting, advised against overreaction, noting these messages are typically automated system alerts rather than individual audits. Most recipients haven't faced follow-up contact from tax authorities.
"Currently, only a small percentage of sellers have received these notices, with even fewer contacted directly by tax offices," Huang explained. "While some small-scale operations have chosen to pay an additional 1% tax for peace of mind, most businesses are adopting a wait-and-see approach."
Huang emphasized that sellers maintaining accurate filings without direct contact from authorities can continue normal operations, particularly during the crucial year-end sales season.
Amazon Reporting Requirements: Full Sales Figures Mandatory
Regarding Amazon transactions, Huang clarified that tax authorities require full sales value declarations, including unsettled amounts corresponding to Amazon's "Gross Sales" metric. Sellers must account for shipped goods in the period of dispatch, regardless of payment status. Payment receipts—reflecting sales minus commissions and advertising fees—require separate verification.
Rising Compliance Costs Challenge Smaller Sellers
Increasing technical and staffing requirements for tax compliance are creating operational challenges, particularly for small and medium sellers. "Previously, flexible approaches worked, but now even basic tax filing requires professional teams—how can small businesses cope?" one seller questioned.
Many sellers have called for clearer regulatory guidance and standardized data integration protocols from tax authorities.
Tiered Regulatory Approach Expected
Industry sources suggest regulators may implement graduated oversight rather than uniform enforcement. While tax authorities have obtained Amazon store data, they reportedly recognize industry particularities and remain in an investigative phase. Future measures may include revenue-based tiered supervision and progressive taxation standards.
Multi-Store Operations Await Policy Clarification
For businesses operating multiple storefronts under common ownership, no definitive policies currently exist. Authorities have acknowledged this operational model and are reportedly developing national-level guidelines.
Industry Standardization Inevitable
The cross-border e-commerce sector's historically low barriers enabled rapid growth but also created uneven competitive conditions. New tax reporting requirements represent a necessary step toward industry maturation.
The recent issuance of tax risk notices by Shenzhen and Guangzhou authorities serves both as warning and catalyst—prompting businesses to address compliance gaps systematically to maintain global competitiveness.