For those in China’s cross-border trade business, a sweeping tax crackdown is beginning to be felt. Heightened scrutiny of unreported overseas income is reshaping cost structures, squeezing margins and forcing exporters to rethink how they operate across borders.
“It has taken a real bite out of profits,” said Henry Huang, a Zhejiang-based exporter who now faces higher taxes yet little room to pass on costs to price-sensitive customers in the United States and Europe.
“It’s hitting everyone in the industry,” he added.
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The pressure follows stepped-up efforts by local Chinese authorities to collect taxes from individuals with undeclared overseas income dating back to 2022, as Beijing tightens enforcement and local governments look to broaden revenue sources.
Local tax authorities said they had used big data analyses to identify taxpayers who failed to report overseas earnings, urging them to make proper declarations and remain compliant.
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“All platform transaction records are traceable – it’s as straightforward as checking your phone bill,” Huang said. “Even overseas platforms provide access for audits conducted by Chinese authorities, so there’s really no option but to cooperate and stay fully compliant.”
