Industry insiders widely believe the rumors have low credibility. On February 3rd, a piece of market speculation stirred the gaming and internet sectors. In the morning session, gaming stocks continued their decline, with Hong Kong-listed gaming leader TENCENT (00700.HK) falling over 6% at one point, and NTES-S (09999.HK) dropping over 3%. The A-share gaming leader Century Huatong (002602.SZ) saw an intraday plunge exceeding 9%, while Kingnet, Giant Network, 37 Interactive Entertainment, and G-bits followed the downward trend.
By the market close, A-share gaming stocks collectively rebounded, tracing a "deep V" recovery pattern. Century Huatong and G-bits both gained over 2%, and the Gaming Index (BK1406) surged more than 3.4% for the day, with all constituent stocks finishing in positive territory. Shunwang Technology led with a substantial 13.8% jump, while Xunyou Technology, Zhejiang Daily Digital Culture, Ourpalm, and Perfect World all registered gains above 5%.
The Hong Kong market also showed signs of recovery; by the afternoon close, TENCENT had narrowed its losses to within 3%, and NTES-S posted a slight increase of 0.3%. The day's volatility was triggered by rumors suggesting that the finance industry and internet value-added services—such as in-game purchases and advertising—could become the next targets for tax rate adjustments due to their high profit margins and relatively light tax burdens. The speculation raised the possibility of rates increasing from 6% toward the 32% level seen in the baijiu (liquor) sector, potentially squeezing profit margins for platform companies like TENCENT.
In response to inquiries about the tax adjustment rumors, industry professionals uniformly stated they had not received any related information, and the general consensus within the sector is that the rumors are highly unreliable. A representative from Century Huatong stated, "We have not received any relevant information, and the company's operations remain normal." Another leading enterprise from Guangdong declined to comment on "market speculation," while a responsible person from a Shanghai-based game company responded, "We have not received any notification."
Jin Hongyun, an independent gaming industry analyst, deemed the idea of raising the game industry's tax rate from 6% to 32% as implausible. He noted that most companies have complex revenue structures, and major players already face effective tax rates between 15% and 25%, leaving little room for further significant increases. Furthermore, he emphasized that raising taxes is not a simple process, suggesting the sell-off was likely an overreaction. Dolphin Research analysis suggested the day's decline was primarily driven by concerns that the VAT rate adjustment recently applied to major telecom operators might be extended to the internet sector. Recent announcements from the Ministry of Finance and the State Taxation Administration included reclassifying internet broadband access services for telecom operators from "Value-added Telecommunication Services" (6% VAT bracket) to the same category as telephone fees, "Basic Telecommunication Services" (9% bracket). Given the internet industry's reliance on data traffic and broadband, this sparked speculation that similar reclassification could gradually be applied to internet services.
An industry insider published an analysis describing the current situation as "rumors and excessive extrapolation." Implementing a nationwide tax system or industry-wide adjustment with significant impact would require a complete set of institutional prerequisites to be met simultaneously. Action from various departments—including finance, taxation, and industry regulators—and thorough preparatory work would be necessary. The process would involve internal deliberation, public consultation, and policy expectation management; none of these steps could be "skipped."
Regarding the day's market volatility, Everbright Securities also released a research report stating that the tax adjustment rumors lack foundation in terms of tax categories, legal basis, and policy logic, making them highly unreliable. The firm advised investors against overinterpreting the situation. Everbright Securities pointed out a fundamental error in the rumors: confusing different types of taxes. The 32% rate for baijiu refers to a consumption tax, while in-game purchases and advertising services are subject to Value-Added Tax (VAT). These are entirely different tax categories with distinct rationales and legal foundations, making any "convergence" impossible. Under the current system, industries like finance, gaming, and advertising fall under the "Modern Services" category of VAT, for which the statutory rate is 6%. This is clearly differentiated from sectors like basic telecommunications and construction, which have a 9% rate, and there is no policy basis for reclassifying them into a higher bracket.
Furthermore, tax rates are bound by legal rigidity and are not easily adjusted. The "Value-Added Tax Law of the People's Republic of China," effective from January 1, 2026, explicitly stipulates three VAT brackets: 13%, 9%, and 6%. Financial services and modern services fall under the 6% rate. The recent Announcement No. 9 (2026) from the Ministry of Finance and the State Taxation Administration specifically adjusted the rate for basic telecommunication services and did not involve financial or internet value-added services. Adjusting tax rates requires rigorous legislative or administrative procedures and is far from the arbitrary process suggested by market speculation.
Beyond legal constraints, multiple analyses suggest the rumors are inconsistent with current policy directions. Huachuang Securities noted that if internet companies faced tax increases, the costs would most likely be passed directly to end consumers. This would run counter to the national policy of promoting consumption, making such a move logically untenable.
Everbright Securities also analyzed that the current policy focus is on "stabilizing growth, promoting innovation, and supporting industrial upgrading." Internet platform economies and the global expansion of games are key supported areas; implementing a blanket tax hike on these critical industries at this juncture would contradict the overall policy orientation.
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