Two high-profile Chinese livestreamers are being investigated for tax fraud

Two e-commerce livestreaming influencers are under investigation for personal tax evasion. The probes are taking place in a climate where web-based business and culture are being reined in by government officials.

The two unnamed livestreamers are accused of concealing large amounts of personal income by passing off these revenue streams as corporate income, according to a notice posted on WeChat by the State Taxation Administration (STA) on Tuesday.

The topic garnered 140 million views on Weibo. Many speculate that the influencers whose finances are being investigated may be two extremely popular figures in the industry, “Livestream Queen” Viya and “Lipstick King” Austin Li Jiaqi. Viya and Li each reportedly draw billions of yuan as income each year.

Livestreamers have capitalized on the proliferation of e-commerce and ease of online purchases in China. By blending entertainment with discounts and other sales tactics, livestreamers who command a captivating stage (or screen) presence are able to sell anything between 15,000 lipsticks in five minutes (as Li did) and an RMB 40 million (USD 5.6 million) rocket launch service (by Viya).

In all, around 617 million people in China are users of livestreaming services. In 2020, 130 million people designated themselves as professional livestreamers, according to an industry report quoted by Xinhua.

These activities generate sizable web traffic and have shaped a highly profitable sector. The market size of livestreaming reached RMB 193 billion (USD 29.8 billion) in 2020.

Now, this segment of the internet economy is under assault. On Wednesday, state-backed newspaper Guangming Daily posted an article that said livestreamers broadcast “indecent content” to lure viewers and boost their exposure. “Without regulation, online streaming would spread harmful content just like cancer,” the article’s author wrote, specifically pointing to damage that may be inflicted on minors.

Some new regulations have been framed as protection measures for children, like the curtailing of mobile gameplay to three hours per week. The reach of some internet communities, like celebrity fan groups, has been restricted on major entertainment platforms.

State media has already blamed video streaming sites for fostering “unhealthy fan culture.” Some analysts believe that the STA’s latest notice is a warning shot for streamers, Yicai reported. The STA said it will continue with more probes into potential tax fraud in the culture and entertainment industry.

Check this out: China Cracks Down on Big Tech

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