Baidu and Alibaba have to pay more taxes after the nternet advertising

under the new regulations, search and electricity providers may have to pay more than 3% of the tax.

yesterday (July 11th) we reported the news of the new regulations on Internet advertising.

new regulations will Internet media (including websites, web pages, App, etc.) directly and indirectly to promote the mode of goods or services are judged as advertising. Specifically, Baidu, 360 search in the promotion, Taobao commodity recommendation has become advertising.

so, Internet Co publicity in these channels not only have to mark advertising, may also have to pay more taxes.

tax administration camp changed to increase the file is so required: including advertising, consulting services, including the modern service enterprises applicable 6% VAT rate.

if the company has advertising revenue, in addition to value-added tax, but also to pay 3% of the tax based on the cultural construction fees".

but before the paid search, has not been determined to promote electricity supplier advertising, so many Internet giants can use business consulting, information services and other matters to achieve revenue recognition, to avoid the extra 3% tax.

Before

, companies may be walking a fine line by way of saying "Oh, but it is not advertising" now all be controlled.

Alibaba reply to Bloomberg said, thanks to the diversification of revenue channels, even if the impact of the introduction of 3% tax on the performance of Alibaba’s profit is minimal.

according to iResearch data, in 2015 China’s online advertising market reached 209 billion 370 million yuan, an increase of 36% over the next three years is expected to grow by 34.1%, respectively, 19.3%. Growth may slow, but the overall market size will remain more than 400 billion yuan in 2018. The search advertising and electricity supplier advertising is still the largest proportion of the advertising type, accounting for 32.6% and 28.1%, respectively.

 

for such a huge market, it is difficult for financial analysts and Ali remain optimistic. Bloomberg quoted Markets and capital markets (DaiWa Capital) John Choi analysis report, the implementation of the new regulations will affect the first quarter of Alibaba about 50% of revenue, or there are 2.4% earnings affected. John Choi and its team also believes that Baidu’s 2017 fiscal year earnings will be reduced to $16 billion 300 million, compared with Bloomberg’s expected low of $4%.

affected by this part of the additional tax, we expect the market to cut Baidu and Alibaba 2017 – fiscal year 2019 earnings expectations.

John Choi said in the report.

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