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The analysis on Chinese e-commerce tax losses based on the perspective of information asymmetry

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  • Wei Han

    (Southwest Jiaotong University)

Abstract

With the rapid development and practical application of e-commerce, the problem of tax losses in electronic commerce has become the focus of extensive concerns in China. For Chinese e-commerce activities, whether there are tax losses and how much is the scale of tax losses? What is the main reason for the e-commerce tax losses in China? These have been considered to be huge challenges for the development of electronic commerce and the collection of national tax. In this paper, the status of e-commerce tax losses in China is estimated by means of tax-loss rate using quarterly data on e-commerce transactions from 2004 to 2017, and the empirical results presented that the scale of e-commerce tax losses increased sharply every year in China. Especially in 2017, the tax-loss rate of Chinese e-commerce is about 14.62%, and the total amount of e-commerce tax losses is about 4.26 trillion RMB, accounting for 29.52% of Chinese actual tax revenue. Moreover, the analytical method of mixed strategy Nash Equilibrium is used to evaluate the effect of information asymmetry on the e-commerce tax losses. Due to the imperfect third-party credit information platform, the information asymmetry makes the effectiveness of tax audit for e-commerce tax authorities and the invisible integrity revenue of the e-commerce taxpayers (the opportunity cost of tax evasion) lower, which is the main reason for the e-commerce tax losses. Based on analysis results of mixed strategy Nash Equilibrium, the suggestions have been proposed to perfect the tax collection and administration system of e-commerce in China.

Suggested Citation

  • Wei Han, 2020. "The analysis on Chinese e-commerce tax losses based on the perspective of information asymmetry," Electronic Commerce Research, Springer, vol. 20(3), pages 651-677, September.
    • Handle: RePEc:spr:elcore:v:20:y:2020:i:3:d:10.1007_s10660-018-9318-7
    DOI: 10.1007/s10660-018-9318-7
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    2. Yoshimi Adachi & Hikaru Ogawa, 2022. "Cross-Border Shopping, E-Commerce, and Consumption Tax Revenues in Japan," CIRJE F-Series CIRJE-F-1204, CIRJE, Faculty of Economics, University of Tokyo.

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    More about this item

    Keywords

    E-commerce; Tax losses; Tax-loss rate; Information asymmetry;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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