# tax compliance

China’s Platforms Tell on Restaurants: The End of ‘Underreported’ Revenues for Small Eateries

A June 2025 rule forcing internet platforms to report merchant transaction data, combined with China’s Gold Tax Phase IV, has enabled tax authorities to reconcile platform receipts with restaurants’ declared sales. Small eateries that historically underreported income through cash sales and shared food‑court licensing now face retroactive tax bills, forced licensing, and a surge in compliance costs. The policy aims to broaden the tax base and curb unhealthy price competition but risks short‑term closures and consolidation in the sector.