A file photo of a digital hongbao.A company from Dongtai city, east China's Jiangsu province, paid 750,000 yuan ($120,000) in tax after giving away e-hongbao via popular social networking app WeChat. (File photo)
(ECNS) -- A company from Dongtai city, east China's Jiangsu province, paid 750,000 yuan ($120,000) in tax after giving away hongbao, red envelopes with gift money inside, via popular social networking app WeChat, Modern Express reports.
The company offered red envelopes worth 3 million on a live promotional TV show in April and voluntarily paid tax on them at the rate of 20 percent. This is the first time that e-hongbao have been taxed, according to the newspaper.
An official from Dongtai's local tax bureau said the public misunderstands tax issues concerning WeChat red envelopes.
Recipients are supposed to pay the tax, but since the procedure is too complex, the company should pay on their behalf.
"In order to prevent tax evasion, taxation on WeChat red envelopes now has a legal basis," said tax expert Zhu Pengzu.
According to Wang Jun, director of the State Administration of Taxation, companies offering gift money do so in a similar vein to providing a bonus and should be taxed.
However, the offering and receiving of red envelopes among families, relatives, and friends does not fall into this category.
