By Duan Bingde, Information Center, DRC

Research Report, No.374, 2021 (Total 6439) 2021-12-7

Abstract: Driven by new information technologies such as the Internet, big data and artificial intelligence, Internet-based gig economy, a flexible form of employment, has developed rapidly in China, with steadily increasing contribution to  economic growth. However, the gig economy mode has posed challenges to tax collection and management system based on traditional economic modes. The nominal tax rate of labor compensation for gig workers is high, and some employers have used loopholes in taxation policies of the gig economy to evade taxes. Since tax collection and management are complicated, it is hard to levy taxes in the gig economy completely in line with current regulations, which has even posed huge challenges to the taxation system. In view of this, the authorities need to reduce nominal tax rate of the gig economy, apply new technologies including big data to improve tax collection and management, enhance supervision on the transfer of labor costs through policies for gig work, improve short-term and long-term tax policies of gig economy and make forward-looking reforms in the digital economy era so as to promote a sound and sustainable development of China’s gig economy.

Keywords: Internet-based platform, gig economy, taxation challenges