Hu Jing used to joke with his noodle stall’s cashier bot about everything from stock to customers. In late October 2025 the mood turned serious: a tax bill arrived after his shop’s platform sales were matched by the authorities, and he paid a supplementary 3,000 yuan in value‑added tax. For two decades in Beijing’s small‑scale catering trade, Hu had relied on informal practices — shared food court credentials, cash takings and few invoices — to keep reported turnover low.
Across the city accountants and owners have been waking up to the same reality. A June 2025 regulation — formally titled the Regulations on Tax‑related Information Reporting by Internet Platform Enterprises — requires platforms to report merchants’ transaction data to tax authorities every quarter. Local life platforms such as Meituan and Dianping, short‑video sales channels like Douyin, and e‑commerce couriers are all within scope, meaning online orders, bundled set‑meals and voucher redemptions are now traceable outside a merchant’s own books.
That rule did not come alone. China’s Gold Tax Phase IV (金税四期), fully rolled out in 2025, knits tax invoices, bank flows, social‑security records and market‑regulator data into a single risk‑scoring apparatus. Tax officials can now cross‑check platform receipts against a restaurant’s declared sales and flag discrepancies for local tax officers to investigate. For small eateries that historically relied on cash payments, partial no‑invoice transactions and informal bookkeeping, the result is less leeway to understate income.
The stakes hinge on tax‑payer classification. Under existing practice restaurants are split between small‑scale taxpayers and general taxpayers; the latter face a higher VAT rate and monthly or quarterly reporting obligations. Many accounting practices deliberately keep reported revenue below the threshold that pushes an outlet over 5 million yuan a year into general‑taxpayer status. Accountants say that, in practice, the choice between categories can change a modest restaurant’s net profit margin by points of percentage and add the burden of monthly rather than quarterly filings.
The new data flows are already forcing operational changes. Some operators have hurried to register independent business licences for food‑court stalls that previously operated under a single venue permit because aggregated platform receipts risk being counted as the food court’s total income. Others have taken down platform packages, cancelled promotional “brush orders” and adjusted menu pricing after discovering platform‑reported sales share was much larger than expected. In one Beijing hotpot case, an accountant hesitated at the quarterly VAT filing deadline and later received a tax notice: the platform’s figures exceeded the restaurant’s declared sales and the business had to make up about 5,000 yuan.
The result is a short‑term shock to small operators whose margins are thin. Several stallkeepers in Hu’s food court have closed since platforms began reporting; some proprietors say a single tax demand is the last straw. At the same time, industry participants and some owners recognise the policy’s rationale: curbing cut‑throat discounting driven by platform‑led group buys, restoring fair competition and broadening the tax base as fiscal pressures grow.
Policy levers matter. Gold Tax IV’s cross‑department data sharing — linked to banks, social insurance and market regulators — moves China from an invoice‑centric enforcement model to one governed by digital data. That allows tax agencies to set heuristic rules (expected cost ratios, labour and utility ranges) and trigger alerts when a merchant’s declared inputs look inconsistent with platform receipts or peer benchmarks. Local tax officers then follow up with targeted reconciliations and, where warranted, retroactive adjustments.
This is not only a story about small shops and tax collection. It illustrates how the Chinese state leverages platform centralisation and data integration to extend regulatory reach into everyday economic activity. The immediate effect will be greater compliance costs, potential closures and a shake‑out among marginal players. Over time, the sector may consolidate around operators that can absorb higher compliance burdens or that fully migrate procurement and invoicing onto formal channels.
For platform companies the new requirements recast them as both data providers and inadvertent enforcers. Their reporting obligations expose merchant behaviour and may force platforms to change how they price, reward or verify promotional activity. For policy‑makers the move buys revenue and helps police unhealthy price competition, but it also raises political and social questions about the pace of enforcement and the need for transitional support to help micro‑enterprises adapt.
The days when small restaurants could safely “pretend” to have lower revenue are ending. The interaction of mandatory platform reporting and a nationwide, data‑rich tax system is tightening the noose on underdeclared income and reshaping the economics of local catering — and perhaps the broader informal sector — in ways that will ripple beyond China’s dining tables.