5-Million Threshold: From Gray-Area Profits to Compliance Audits—The Era of Tax Settlements Is Inevitable for Cross-Border Sellers!
In early November 2025, the Amazon seller backend experienced a “crash” due to frequent requests for tax-related data; as a result, sellers were unable to view their invoices or income details.
What lies behind this is thetax-related concerns of cross-border sellers. A large number of sellers are eager to verify their tax-related information, which has caused the Amazon platform’s systems to become overloaded. The excessive traffic generated has made even the simplest operations difficult to perform.
At the same time, tax authorities in cities such as Shenzhen, Yiwu, and Ningbo have successively issued “Tax Risk Warning Letters”, addressing issues related to discrepancies in the information submitted by sellers. These issues mainly include situations where the income reported to the platforms does not match the actual figures declared by the sellers, as well as cases where sellers with annual sales exceeding 5 million yuan fail to promptly apply for the status of general taxpayers. Without exception, all these tax notices point to one undeniable fact: The cross-border e-commerce industry is fully entering an era of tax transparency, and the issue of sellers’ tax compliance has become the most urgent challenge facing this industry. .
01 ) From “manual inspection” to “system-based comparison” Upgraded tax supervision measures In 2025, the tax supervision of cross-border e-commerce was enhanced. Through the automated comparison of three sets of data – “platform reports”, “payment transaction records”, and “customs declarations” –the previous grey areas were completely eliminated.6<#> Platforms such as Amazon, TikTok Shop, and Temu have fully integrated with the tax information sharing system. As a result, tax authorities can obtain real-time data on sellers’ sales amounts, refund amounts, commissions, and other key financial indicators. This data can then be cross-verified with payment transaction records as well as customs export declarations.
1. The information submitted by the platform does not match the information declared. The platform uploads sellers’ income, refunds, commissions, and other relevant information in real time. This data is automatically compared with the information reported by the sellers in the tax system. In the event of any discrepancies, the system immediately marks the respective sellers as “abnormal entities” and triggers further investigations. Industry data: After the mandatory implementation of the “Regulations on the Submission of Tax-related Information by Internet Platform Enterprises” in 2025, the tax data submission coverage rates of platforms such as Amazon, eBay, and Shopee exceeded 95%. 2. The payment method does not match the information provided in the declaration. The payment records of cross-border sellers, including the amounts received and the frequency of withdrawals, will be incorporated into the tax system for cross-referencing with the platform’s data. If there are any discrepancies in the flow of funds or inconsistencies in the payment methods used, the tax authorities will conduct a risk assessment. In such cases, sellers may be required to provide additional documentation or adjust their tax declarations accordingly. 3. The customs export declaration data do not match. There is a discrepancy between customs declaration data and sales records. Especially in cases where the “pay-on-delivery” payment method is used, it is difficult for sellers to provide compliant export documents. In the event of any issues, sellers not only face the need to pay additional taxes, but may also have their eligibility for export tax refunds revoked. Changes in the core logic: Tax inspections are no longer focused on “investigating individuals”, but rather on identifying discrepancies in the systems. In the past, explanations were needed to clarify the situation; now, algorithms are used instead. Back then, people were concerned about manual inspections; nowadays, the main concern is data inconsistency. 02） Compliance requirements are accelerating the “reshuffle” of the market, and a clear differentiation among sellers is already taking place. Industry Disruption In the process of improving tax compliance, cross-border e-commerce sellers are undergoing a rapid reshuffle within the industry. The following shows the differentiation among these three types of sellers: The products are selling like hot cakes, accelerating the clearance of the inventory in that area. Top-tier brand sellers, such as P*P*t and A**er, usually have well-established financial and tax compliance systems. They possess the authority to handle customs declarations on their own and are eligible for export tax rebates and exemption policies. In addition, they typically have global financial settlement systems that enable them to adapt to any changes in tax regulations and compliance requirements. For example:By establishing subsidiaries in the United States and Hong Kong, the company was able to optimize its tax arrangements on a global scale, thusreceiving tax benefits during its cross-border sales. Sellers in the mid-to-lower waist segment are experiencing extreme levels of anxiety. These sellers usually fail to establish a comprehensive tax compliance system. When operating across multiple platforms, their financial records become disorganized; moreover, the lack of uniformity in payment methods makes it much easier for tax authorities to detect discrepancies in their financial reports. For these sellers, resolving these issues is quite challenging, as they need to thoroughly organize and standardize their financial management and tax filing processes. For example, a Chinese seller operated his business through both Amazon and TikTok Shop, achieving sales totaling nearly 10 million RMB. Due to the inability to properly connect his accounts to the tax system, the revenues from these accounts could not be accurately matched, resulting in a tax payment notice being issued by the tax authorities. Small sellers often find themselves in situations where it’s difficult to proceed with their operations effectively. Most small sellers do not have a professional finance team; instead, they rely on accounting firms to handle their tax-related matters. Due to a lack of understanding of the tax compliance requirements for cross-border e-commerce, they may encounter difficulties inproviding the necessary compliance documents. For example, Mr. Wang, a small-scale cross-border seller with an annual sales volume of 5 million yuan, decided to use an accounting firm to handle his tax declarations. However, he failed to obtain the necessary export customs documents in a timely manner, which led to numerous problems during the tax audit. As a result, his company was unable to benefit from the tax exemption policies. The real risk lies not in the tax rates, but in the asymmetry of information. While the tax authorities rely on the systems to process the data, you have to submit documents instead. . 03） From “tax avoidance mindset” to “design mindset” Structural breakthrough
The advancement of tax compliance is leading to the emergence of different development paths among sellers.How can sellers cope with this compliance challenge?Here are the key steps for future tax management: Creating a reconciliation template for the “integration of three reports” <#>Quarterly reconciliations: Platform sales revenue, amounts recorded through payment channels, and export amounts reported to customs. In case any discrepancy exceeds 5%, it must be promptly recorded and explained to avoid unnecessary tax issues in the future. Industry reference data: According to reports from domestic tax consultants, approximately 75% of sellers fail to reconcile their data with that of the third parties on time, resulting in incorrect declarations during the preliminary review process. Rebuild the export link. Self-declared customs clearance: By applying for the right to export goods independently, you can use declaration methods such as9710 or 9810to enjoy export tax rebates and exemption policies. Tax system: To avoid potential tax issues in the future, sellers shouldensure that all export documents are complete, especially when going through the 9810 tax refund process. Optimize the main architecture. Global financial management is carried out through a Hong Kong-based holding company, enabling profit allocation and tax optimization. This allows sellers to take advantage of Hong Kong’s lower tax rates, while avoiding the high tax burdens associated with cross-border e-commerce. In an era of increased tax transparency, companies that are able to effectively integrate data from various sources such as platforms, payment systems, and customs authorities, and implement automated verification processes as well as mechanisms for detecting anomalies, will gain a competitive advantage on the path to compliance.2<#> 04） The “compliance benefits” are about to become evident. Trend Insights
Tax compliance is not only a crucial factor for avoiding risks; it also provides cross-border e-commerce sellers with significant strategic advantages, especially in the context of the increasing transparency and standardization of the global e-commerce market by 2025. With the strengthening of tax regulations in various countries, sellers who take proactive steps to ensure compliance will have more market opportunities and a greater competitive edge.
1. Policy benefits: Enjoy export tax rebates and other tax incentives. Compliant sellers can take advantage of the country’s tax rebate and exemption policies by following the proper export procedures, thereby reducing their tax burdens and increasing their profit margins. In particular, Chinese sellers can apply for export tax rebates and enjoy the VAT exemption policy by following standardized customs declaration procedures. 2. Financing Support: Improving creditworthiness and financing capabilities through enhanced tax compliance. Compliant sellers can more easily obtain financing from banks and financial institutions. This is especially true when it comes to loans, credit limits, and capital turnover in cross-border e-commerce. Sellers with transparent tax records can get financing more quickly, thus reducing their costs. 3. Facilitated cross-border customs clearance: The customs clearance process is simplified, thus avoiding delays. Companies that comply with tax regulations can pass through customs more smoothly, avoiding delays in cross-border transactions caused by tax non-compliance. This is particularly important in markets such as the European Union and the United States. By 2025, as tax and compliance regulations become increasingly stringent, the biggest challenge for cross-border e-commerce sellers will be how to quickly adapt to the new tax requirements and turn compliance into a core competitive advantage for their businesses. Compliance is not only a means of avoiding risks; it is also the cornerstone upon which cross-border e-commerce can thrive and expand in the long run. The competition in the future will no longer be about being “cheaper”; instead, it will be a battle focused on transparency and compliance.
Sellers who manage to ensure that their records match the actual inventory will enjoy lower tax burdens, simplified customs clearance procedures, more financing opportunities, and a more solid market foundation. As a result, they will become the new leaders in the global cross-border e-commerce industry.