China: National VAT e-invoicing targeted this year

China sets to escalate its VAT e-invoicing practice to a nationwide scale by the end of this year, after wide-ranging trials in Shanghai, Guangdong, and Inner Mongolia provinces early this year. 

To cope with the new practice, the official online VAT system (called the “Golden Tax System”), is launching its phase-VI version by the end of this year and would be accessible to all taxpayers and industries by 2025. The whole VAT e-invoicing program will progress in two stages, issuance and receipt.

E-invoice issuance (in three pilot areas) 

VAT taxpayers in three pilot places, i.e. Shanghai, Guangdong, and Inner Mongolia, can now issue VAT e-invoices to their customers in China as long as they have access to the online VAT invoicing function in the Golden Tax System. 

• Online format
  
  Companies in most industries in the said three areas can now issue electronic VAT invoices – creating the same legal effect as their paper version.  
  
  Moreover, specially formatted e-invoices are also available online for transactions in some scarce sectors like the sales of rare earth, cigarettes, construction or transportation services, real estate sales and leasing services, agricultural product acquisition, photovoltaic acquisition, collection of vehicle and vessel taxes and sales of self-produced agricultural products etc.
  
  For the time being, an exception still applies to the sales of automobiles (new or second-hand) and the collection of highway tolls. Until the online system is available, these business operators still have to continue issuing paper versions of VAT invoices. 

• Invoice quota
  
  In principle, the same invoice quota still applies to their electronic version. The aggregate value of invoices issued per month, in paper or electronic formats, should not exceed the monthly limit set by the tax authorities for each company. However, there is no ceiling set on the maximum value of a single e-invoice, as opposed to paper invoices which have a pre-set par value. For e-invoicing, upward quota adjustment will be made easier for those taxpayers of good credibility.

E-invoice receiving (nationwide) 

Customers, no matter where they are in China, can now receive VAT e-invoices issued by companies based in Shanghai, Guangdong, and Inner Mongolia and process them as input VAT. They can also verify the validity and the data of an e-invoice by quoting its twenty-digit number online.
 

Read the WTS Global VAT Newsletter here.