Key trends of administration of VAT invoices in China
Since the upgraded VAT invoice system was put in use in 2015, the Chinese tax authorities have launched a series of reforms with respect to the administration of VAT invoices. We have summarised below some recent major developments:
Cancellation of special VAT invoice verification process
In February 2016, the State Administration of Taxation (SAT) released the Public Notice Regarding the "Cancellation of VAT Invoice Verification Process for Taxpayers with a level A Tax Credit Rating" (SAT Public Notice [2016] No.7) stipulating that, starting from 1 March 2016, taxpayers with a level A tax credit rating are not required to scan the VAT invoices which they received for verification purpose. Instead, the VAT invoice information can be obtained by logging onto VAT Invoice Inquiry Platform through the VAT Invoice Control Software. This indicates that the pilot run of the cancellation of the special VAT invoice verification process in Ningbo last year is a success, and it is now rolled out nationwide. It is expected that the scope could be further expanded to cover all kinds of General VAT Taxpayers in the future when the time is ripe.
Tax classification and coding for goods and services
In February 2016, the SAT released the Notice on Implementing the Pilot Program of Tax Classification and Coding for Goods and Services (Shuizonghan [2016] No.56), announcing that VAT payers in Beijing, Shanghai, Jiangsu and Guangdong provinces are selected to pilot run the issuance of VAT invoices using the upgraded VAT invoice system with coding functions in batches from 19 February 2016. The coding system covers all the prevailing taxable items, which includes 4021 subjects classified as goods, labour services, services, and intangibles. With the unified coding system, the "name of subject" column in the invoices issued by pilot taxpayers will be consistent.
Promotion of e-invoice
At the end of 2015, the General Offices of the CPC Central Committee and the State Council jointly released the Plan on Deepening the Reform of Tax Collection and Administration System of State Tax Bureaus (STB) and Local Tax Bureaus (LTB) (the "Plan"). One of the tasks put forward in the Plan is to improve the administration of VAT invoice by leveraging on the upgraded VAT invoice system, to promote e-invoices and achieve on-line invoicing for all invoices in 2016. Along with the further development of information technology, it is expected that the effort of the Chinese tax authorities on the administration of VAT invoices will be enhanced continuously.
Taxpayers shall timely study the changes brought about by the above latest developments in the administration of VAT invoice and adjust their internal compliance procedure for the issuance of VAT invoice accordingly so as not to impact the daily operation of the company.
Cancellation of special VAT invoice verification process
In February 2016, the State Administration of Taxation (SAT) released the Public Notice Regarding the "Cancellation of VAT Invoice Verification Process for Taxpayers with a level A Tax Credit Rating" (SAT Public Notice [2016] No.7) stipulating that, starting from 1 March 2016, taxpayers with a level A tax credit rating are not required to scan the VAT invoices which they received for verification purpose. Instead, the VAT invoice information can be obtained by logging onto VAT Invoice Inquiry Platform through the VAT Invoice Control Software. This indicates that the pilot run of the cancellation of the special VAT invoice verification process in Ningbo last year is a success, and it is now rolled out nationwide. It is expected that the scope could be further expanded to cover all kinds of General VAT Taxpayers in the future when the time is ripe.
Tax classification and coding for goods and services
In February 2016, the SAT released the Notice on Implementing the Pilot Program of Tax Classification and Coding for Goods and Services (Shuizonghan [2016] No.56), announcing that VAT payers in Beijing, Shanghai, Jiangsu and Guangdong provinces are selected to pilot run the issuance of VAT invoices using the upgraded VAT invoice system with coding functions in batches from 19 February 2016. The coding system covers all the prevailing taxable items, which includes 4021 subjects classified as goods, labour services, services, and intangibles. With the unified coding system, the "name of subject" column in the invoices issued by pilot taxpayers will be consistent.
Promotion of e-invoice
At the end of 2015, the General Offices of the CPC Central Committee and the State Council jointly released the Plan on Deepening the Reform of Tax Collection and Administration System of State Tax Bureaus (STB) and Local Tax Bureaus (LTB) (the "Plan"). One of the tasks put forward in the Plan is to improve the administration of VAT invoice by leveraging on the upgraded VAT invoice system, to promote e-invoices and achieve on-line invoicing for all invoices in 2016. Along with the further development of information technology, it is expected that the effort of the Chinese tax authorities on the administration of VAT invoices will be enhanced continuously.
Taxpayers shall timely study the changes brought about by the above latest developments in the administration of VAT invoice and adjust their internal compliance procedure for the issuance of VAT invoice accordingly so as not to impact the daily operation of the company.
