China Considers Withdrawing Tax Benefits for Internet Companies Including Alibaba

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Chinese authorities, who are strengthening regulations on giant internet technology companies, are expected to introduce a 'withdrawal of tax benefits' card.

On the 12th (local time), Caixin, a Chinese economic magazine, reported citing Chinese tax officials that Chinese regulatory authorities are reviewing tax benefits for Chinese internet technology companies.

Tax authorities explained that they are considering strengthening the requirements for internet technology companies eligible for tax reductions by strictly applying the criteria for 'core software companies.'

Earlier, Alibaba Group, China's largest e-commerce company, stated that the Chinese government may soon abolish tax benefits for the internet industry.

Separately, Securities Times, a sister publication of the People's Daily, the official newspaper of the Chinese Communist Party, argued last week that tax benefits for the online gaming industry should be abolished.

In an article on the 5th, Securities Times urged that tax benefits for Chinese online gaming companies should be discontinued because they have grown into 'international actors.'

Regarding these reports from Chinese state media, Oppenheimer's senior analyst Feibo forecasted, "The tax environment for China's giant technology companies, especially giant internet technology companies, is likely to worsen."

There is also speculation that strengthening taxation on internet technology companies could be the 'last card' in Chinese authorities' regulation of technology companies.

Previously, Chinese authorities have imposed various regulations on giant technology companies, starting with the refusal of Ant Group's initial public offering (IPO) on the Shanghai and Hong Kong stock exchanges in November last year.

Ant Group, a fintech company led by Alibaba Group founder Ma Yun, planned to simultaneously list on the Shanghai and Hong Kong stock exchanges in early November last year, raising a record $34 billion (38.3 trillion won). However, the IPO was canceled due to a sudden halt by Chinese authorities.

Subsequently, Chinese authorities launched an 'internet security review' on Didi Chuxing, China's largest ride-sharing company, immediately after its listing on the New York Stock Exchange (NYSE) at the end of June, citing reasons such as 'preventing national data security risks, protecting national security, and ensuring public interest.'

This content was produced with the assistance of AI translation services.