The main contents of the latest announcement on matters related to the "reverse invoicing" of resource recycling enterprises to sellers of scrapped products by natural persons can be summarized as six aspects: "clear scope, clear deduction, clear discount, increased convenience, increased standardization, and increased efficiency".
Xinhua Finance and Economics, Beijing, April 26 (Reporter Dong Daoyong) A few days ago, the State Administration of Taxation issued the "Announcement on Matters Concerning the "Reverse Invoicing" of Resource Recycling Enterprises to Sellers of Scrapped Products of Natural Persons (hereinafter referred to as the "Announcement"), clarifying the specific measures and operating methods of "reverse invoicing" of resource recycling enterprises to sellers of scrapped products of natural persons, creating a good tax environment for the accelerated development of the whole industrial chain of the resource recycling industry, and helping to improve the quality and level of national economic circulation.
Promoting large-scale equipment renewal and trade-in of consumer goods is a major deployment made by the CPC Central Committee and the State Council with an eye on the overall situation of high-quality development. On February 23, 2024, the fourth meeting of the Central Financial and Economic Commission made arrangements to promote a new round of large-scale equipment renewal and trade-in of consumer goods. On March 7, the State Council issued the "Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods", which clearly requires "promoting the practice of 'reverse invoicing' by resource recycling enterprises to sellers of scrapped products by natural persons".
On the basis of extensive research, the State Administration of Taxation has listened to the opinions and suggestions of industry associations, enterprises and grassroots tax departments, improved the business system, refined the operation methods, optimized the information system, and prepared and issued announcement documents, so as to rapidly promote the implementation of policies and measures. The main contents of the latest "Announcement" can be summarized into six aspects: "clear scope, clear deduction, clear discount, increased convenience, increased standardization, and increased efficiency":
- Clearly defined scope. The Announcement clarifies the scope of issuers and receivers of "reverse invoicing". The invoicing party is a resource recovery enterprise, including both units and individual industrial and commercial households, and the implementation of "reverse invoicing" must have the qualification to engage in the relevant recycling industry, and it also needs to actually engage in resource recovery business. The drawee is a natural person who sells scrapped products, including both natural persons who sell scrapped products used by themselves and natural persons who sell acquired scrapped products. If the cumulative sales of "reverse invoicing" of scrapped products sold by natural persons for 12 consecutive months exceed 5 million yuan, the resource recovery enterprise shall guide the natural persons who continue to engage in the sale of scrapped products to register as business entities in accordance with the law and issue invoices on their own in accordance with the regulations.
- Explicit deduction. At present, the front-end natural persons engaged in socialized resource recycling often use the method of "sales without tickets" to sell scrapped products to resource recovery enterprises, and resource recovery enterprises lack the "first ticket", which can neither deduct the input VAT value-added tax, nor obtain the evidence of the cost of enterprise income tax before tax. After the implementation of "reverse invoicing", resource recovery enterprises can issue special VAT invoices or ordinary invoices according to regulations. If a special invoice is issued, under the principle of "consistent tax collection and deduction", the resource recovery enterprise that implements the general VAT calculation method can deduct the VAT tax amount indicated in the special invoice, and the VAT deduction chain is further smooth, and its purchase expenditure can also be deducted before the enterprise income tax to further reduce the cost of the enterprise;
- Bright discounts. In order to better implement the "reverse invoicing" measure, the "Announcement" clearly supports business entities engaged in resource recovery business under the existing policy framework. The first is to allow natural persons to apply the VAT reduction and exemption policy for small-scale taxpayers to sellers of scrapped products. Most of the natural person sellers who sell scrapped products through "reverse invoicing" are in continuous operation, and the resource recovery enterprises have also realized regular tax payment after paying taxes on their behalf. In order to implement the preferential policies, the "Announcement" clarifies that sellers can enjoy preferential tax policies such as VAT exemption for small-scale taxpayers with monthly sales of less than 100,000 yuan and 3% levy rate minus 1% for VAT calculation and payment through "reverse invoicing" for scrapped products. The second is to give resource recovery enterprises that currently apply the simplified VAT calculation method the right to choose a one-time VAT calculation method. The Announcement allows taxpayers to change the VAT calculation method at one time before July 31, 2024, giving taxpayers another choice, so that taxpayers can choose the appropriate VAT calculation method according to their actual situation after the implementation of "reverse invoicing". The third is to do a good job in connecting with the comprehensive utilization of resources value-added tax collection and refund policy. In 2021, when the Ministry of Finance and the State Administration of Taxation formulated and issued the Announcement on Improving the VAT Policy for Comprehensive Utilization of Resources, in order to avoid taxpayers from neglecting to obtain invoices after enjoying the VAT refund policy, resulting in tax evasion loopholes in upstream links, it was clearly required that "taxpayers who purchase renewable resources in China shall obtain VAT invoices from the seller in accordance with the regulations" before they can enjoy the preferential treatment. After the implementation of "reverse invoicing", some resource recovery enterprises that meet the specified conditions and enjoy the preferential treatment of immediate collection and refund can also apply "reverse invoicing". In order to ensure that these taxpayers fully enjoy the policy of immediate collection and refund, the "Announcement" clarifies that the invoices issued in reverse belong to "obtaining VAT invoices from the seller", that is, the sales corresponding to the invoices issued in reverse can also enjoy the preferential policy of immediate collection and refund.
-- Increasing convenience. The "Announcement" fully considers the convenience of "reverse invoicing" for resource recovery enterprises. For resource recovery enterprises: First, all kinds of tickets can be issued. Resource recovery enterprises can either reverse invoicing through the electronic invoice service platform (digital invoices) or reverse invoicing through the VAT invoice management system (tax control invoices), without replacing the current invoicing system. Second, the commodity code is set separately. The tax department has specially set up a code for "scrapped products", covering ten major scrapped products such as "scrap steel" and "waste plastics", "reverse invoicing" by resource recovery enterprises, and when taxpayers issue invoices for the sale of scrapped products, they can be applied. Third, the invoicing amount is adjusted as needed. Resource recovery enterprises that implement "reverse invoicing" need to issue invoices for purchase and sales, and the original demand for invoice issuance quota has increased. In this regard, the Announcement allows resource recovery enterprises to apply to the competent tax authorities for adjustment of the invoice amount or the maximum invoice limit and number of copies according to the actual business needs of "reverse invoicing". For the seller of scrapped products of natural persons, in accordance with the regulations, the sale of scrapped products needs to be invoiced by the tax authorities and pay the corresponding taxes and fees on a per-time basis, after the implementation of "reverse invoicing", the "announcement" clarifies that resource recovery enterprises should be in accordance with the provisions of the natural person scrapped product sellers on behalf of the declaration of value-added tax and additional taxes and individual income tax, effectively reducing the tax burden of natural persons. In addition to the above measures, the announcement also clarifies that the tax authorities will continue to optimize tax payment services, use new information technology means to continuously improve the convenience of resource recovery enterprises to "reverse invoicing" and handle taxes and fees, and the sense of gain of resource recovery enterprises and sellers of scrapped products by natural persons will continue to increase.
-- Increasing norms. The implementation of "reverse invoicing" will more effectively promote the construction of a unified national market through the standardized application of tax policies and the national unification of law enforcement standards. On the one hand, it reduces the business risk of sellers of scrapped products by natural persons. Previously, natural persons engaged in the recycling of scrapped products in mainland China often did not register as business entities, did not issue (or issue) invoices for buyers, and did not pay relevant taxes and fees in accordance with regulations, which posed greater business risks. After the implementation of "reverse invoicing", the resource recovery enterprises will handle the payment of value-added tax and additional taxes and individual income tax on their behalf, which not only reduces the tax burden of natural persons, but also reduces the tax and business risks of natural persons engaged in recycling business; in the long run, the "sunshine" operation of the front-end waste collection link will further promote the "de-risking" of the back-end links such as waste sales and waste use, so as to promote the standardized and healthy development of the whole industrial chain of the entire resource recycling industry. On the other hand, standardize the behavior of resource recovery enterprises to reduce the risk of false invoicing. The "Announcement" puts forward the requirements for the implementation of "reverse invoicing" resource recovery enterprises to establish acquisition accounts, be responsible for the authenticity of recycling business, and strictly carry out pre-tax deduction management, and achieve standardization and unity in the implementation standards and caliber of tax policies, aiming to create a fair and just tax environment, strictly prevent criminals from speculating, and support the healthy and orderly development of compliant enterprises.
- Increase efficiency. In order to implement the deployment requirements of the CPC Central Committee and the State Council as soon as possible, release the policy effect as soon as possible, respond to social expectations, and meet the invoicing needs of resource recovery enterprises, the "Announcement" clarifies that recycling enterprises that are willing to "reverse invoicing" from April 29 can submit relevant information to the tax authorities, and after completing the prescribed simple procedures, they can conveniently realize "reverse invoicing" in the first time.
The person in charge of the relevant department of the State Administration of Taxation said that the tax department will continue to conscientiously implement the decisions and arrangements of the Party Central Committee and the State Council, give full play to the role of tax functions, and strengthen the implementation of various tasks of "reverse invoicing", so as to promote large-scale equipment renewal and consumer goods trade-in. At the same time, it will establish and improve the tax risk monitoring and early warning mechanism for "reverse invoicing", track and monitor and analyze the implementation of policies in various regions, and crack down on the illegal behavior of criminals using "reverse invoicing" to issue false invoices, so that the violators can "move an inch", so that law-abiding enterprises can develop better, and promote the formation of a virtuous circle of "good money drives out bad money", so as to solidly promote the "excellent environment" for equipment renewal and consumer goods trade-in.
(Source: Xinhua Finance)
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Editor: Lin Chengpeng
Producer: Zheng Wei
Review: Su Jiafu
Issued by: Huang Yichuan
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