Ministry preparing to impose tax on online vendors

The Ministry of Commerce is planning to impose a tax on online merchants in a bid to regulate the country's fast-expanding e-commerce market, ministry spokesperson Yao Jian said Tuesday, without revealing the time frame or further details.

Late last month, media reports said a 5 percent tax on online merchants' earnings would be launched before the end of this year, following a proposal for such a tax in March by Zhang Jindong, chairman of Suning Group, the country's largest home appliance retailer by market value.

The authorities had not responded to the speculation over the tax before Tuesday.

As people are increasingly enthusiastic about shopping online thanks to the convenience and generally lower prices, the e-commerce market has been expanding rapidly, eroding the profits of traditional retailers, who are subject to stricter tax rules, Sun Peilin, an e-commerce industry researcher at Analysys International, told the Global Times.

"As a result, it is high time that the country designed taxation for online merchants, in order to ensure fair competition between online merchants and traditional retailers," Sun said.

The total domestic e-commerce transaction value reached 8.02 trillion yuan ($1.31 trillion) last year, up 31.7 percent from the previous year, according to a report released by MOC on May 28.

The report also showed that the number of online shoppers had reached 242 million by the end of last year, up 24.8 percent year-on-year.