China regulator says should consider digital data tax for tech firms

"Some third-party platform-like enterprises hold a large amount of users data, just like holding precious mineral mines," science and technology supervision bureau chief said

Several global firms missed the July 7 deadline of depositing tax, expecting that the Indian government might review the levy — Yao Qian said the value of the platform-like enterprises was created by their users, and users are supposed to share the profits with those enterprises

2 min read Last Updated : Dec 17 2020 | 1:50 AM IST

China should consider imposing a digital tax on technology companies that hold copious amounts of user data, a securities watchdog official was quoted as saying by Beijing News, in the latest sign of widening government scrutiny of the sector.

“Some third-party platform-like enterprises hold a large amount of users data, just like holding precious mineral mines,” the government-back newspaper cited Yao Qian, science and technology supervision bureau chief at the China Securities Regulatory Commission (CSRC), saying at a forum held in Beijing.

Yao said the value of the platform-like enterprises was created by their users, and users are supposed to share the profits with those enterprises.

"Coupons and red-pocket subsidies offered by those platforms at their early stage of developments are used more as a marketing approach," Yao said. "As the real creators of corporate value, users have not shared real benefits from revenues that have been made."

"As representatives of the public, governments should study in depth whether it's necessary for them to levy digital taxes to platform-like enterprises, just like they levy taxes on natural resources." China has vowed to strengthen oversight of its big tech firms, which include the likes of Alibaba Group Holding and Tencent Holdings that rank among the world's largest and most valuable.

The use of consumer data, in particular, has become a key issue for the government, and Guo Shuqing, the head of China's Banking and Insurance Regulatory Commission, said this month that there was a need to clarify data rights as it viewed data as an economic contributor like labour and capital.

"Big Techs have de facto control over data...It is necessary to clarify data rights of different parties soon, and improve data flow and pricing mechanism," Guo said.