Digital 'red envelopes' from companies need to be taxed

A Chinese mobile phone user tries to snatch Hongbao (red envelope) via a mobile app in Chongqing municipality on Feb 24. [Photo / IC]

According to some media reports, the State Administration of Taxation issued a notice to its provincial and city bureaus on July 28 - not confirmed or published by the administration on its website till Sunday - saying WeChat, Alipay or Weibo "red envelopes", digital "gift" money, will be taxed if they are transferred by enterprises to individual employees. Digital "red envelopes" transferred between individuals, however, will not be taxed. Comments:

It is easy to issue such a notice but hard to monitor the digital "red envelopes" given by enterprises to their employees. The Internet is a revolutionary invention for not only the industry but also the taxation authorities. But it has made it easier to evade tax, too. Tax abatement is a good way of promoting the growth of enterprises. Yet evading tax and tax abatement are two different things. Paying tax is the duty of all enterprises.

Southern Metropolis Daily, Aug 6

There is no legal basis to levy tax on digital "red envelopes" given by enterprises to their employees. What if the enterprises do not declare the taxable fund transfers? The taxation authorities need to issue more detailed implementation regulations on the new tax, and provide necessary technological means for local taxation bureaus to monitor the digital "red envelopes". Otherwise, the new tax will be just empty talk.

Beijing Youth Daily, Aug 6

The tax authorities have to first identify the digital "red envelopes" transferred by enterprises and individuals. What if WeChat operators or other Internet companies create a special channel for enterprises to send "red envelopes" to their employees?

Huxiu.com, Aug 6

People who send "red envelopes" should abide by the law and not evade tax. "Red envelopes" given to employees are like rewards, and the amount received by individuals is random. As such, the tax on individual "red envelopes" should be deducted at source by the enterprises before sending them.

Wang Jun, head of the State Administration of Taxation, March 13