The State Administration of Taxation clarifies the implementation measures for "reverse invoicing" of resource recovery enterprises...

How does the State Administration of Taxation clarify the implementation measures for "reverse invoicing" of resource recovery enterprises and affect the future development of recycled metals?

In order to thoroughly implement the major decisions and arrangements of the Party Central Committee and the State Council on promoting large-scale equipment renewal and trade-in of consumer goods, on April 25, the State Administration of Taxation issued the "Announcement on Matters Concerning the "Reverse Invoicing" of Resource Recovery Enterprises to Sellers of Scrapped Products by Natural Persons, clarifying the "reverse invoicing" of resource recycling enterprises to sellers of scrapped products by natural persons Specific measures and operating methods will create a good tax environment for the accelerated development of the entire industrial chain of the resource recycling industry, and help improve the quality and level of national economic circulation. What is the impact of the implementation of the "reverse invoicing" measures on the future development of the recycled metal industry such as recycled copper and recycled aluminum?

The original text is as follows:

Announcement of the State Administration of Taxation on Matters Concerning the "Reverse Invoicing" of Resource Recovery Enterprises to Sellers of Scrapped Products by Natural Persons

The State Administration of Taxation issued the announcement of the State Administration of Taxation on matters related to the "reverse invoicing" of resource recovery enterprises to sellers of scrapped products of natural persons", which proposed:

In order to implement the requirements of the "Notice of the State Council on Printing and Distributing the Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods" (Guo Fa [2024] No. 7), and implement the "reverse invoicing" of resource recovery enterprises to sellers of scrapped products by natural persons, the relevant matters are hereby announced as follows:

1. From April 29, 2024, the seller of scrapped products by natural persons (hereinafter referred to as the seller) sells scrapped products to resource recovery enterprises, and qualified resource recovery enterprises may issue invoices to sellers (hereinafter referred to as "reverse invoicing").

Scrapped products refer to products that have lost all or part of their original use value in the process of social production and consumption. The seller refers to a natural person who sells scrapped products used by himself or sells scrapped products acquired, and the cumulative sales of "reverse invoicing" for no more than 12 consecutive months (referring to natural months, the same below) does not exceed 5 million yuan (excluding VAT, the same below).

2. Resource recovery enterprises (including units and individual industrial and commercial households, the same below) that implement "reverse invoicing" shall meet one of the following three conditions and actually engage in resource recovery business:

(A) engaged in hazardous waste collection, shall comply with the requirements of the national hazardous waste business license management measures, to obtain a hazardous waste business license;

(2) Those engaged in the recycling of scrapped motor vehicles shall comply with the requirements of the management measures for the recycling of scrapped motor vehicles issued by the competent department of commerce of the State and obtain the qualification certificate of the recycling and dismantling enterprise of scrapped motor vehicles;

(C) in addition to hazardous waste, scrapped motor vehicles, other resource recovery enterprises shall comply with the requirements of the State competent department of commerce issued by the management measures for the recycling of renewable resources, the registration of business entities, and in the Department of Commerce to complete the recycling of renewable resources for the record.

3. 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 not "reverse invoicing" to it. Resource recovery enterprises shall guide 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 regulations.

4. If a resource recovery enterprise needs to "reverse invoicing", it shall submit the application form for "reverse invoicing" of resource recovery enterprises (Annex 1) to the competent tax authorities, and provide a hazardous waste business license or a qualification certificate for scrapped motor vehicle recycling and dismantling enterprises or a registration certificate for renewable resource recovery operators of the commerce department.

5. Resource recovery enterprises shall, through the electronic invoice service platform or the value-added tax invoice management system, issue invoices marked with the words "scrapped product acquisition" to the seller online.

6. When resource recovery enterprises issue invoices on their own for the sale of scrapped products, and taxpayers should correctly select the "scrapped products" category code (Annex 2) in accordance with the new "Commodity and Service Tax Classification Coding Table". The State Administration of Taxation will optimize and adjust the Goods and Services Tax Classification Coding Table in a timely manner as needed, and update it in the invoicing system in a timely manner.

7. Resource recovery enterprises may, according to the actual business needs of "reverse invoicing", apply to the in-charge tax authorities for adjustment of the invoice amount, or the maximum invoice limit and number of copies in accordance with the regulations.

8. If a resource recovery enterprise sells scrapped products and applies the simple VAT calculation method, it may issue ordinary invoices in reverse, but shall not issue special VAT invoices in reverse; If a resource recovery enterprise sells scrapped products and the VAT calculation method is changed, it shall apply for an adjustment of the ticket type of "reverse invoicing". Resource recovery enterprises can deduct the tax indicated on the special VAT invoice issued in reverse according to the regulations.

9. If a general VAT taxpayer in a resource recovery enterprise sells scrapped products, and has chosen to apply the simplified VAT calculation method in accordance with the relevant provisions before the implementation of this announcement, it may choose to apply the general VAT calculation method before July 31, 2024.

Click to view the details of the announcement: 》The State Administration of Taxation announced the relevant matters of "reverse invoicing" by resource recovery enterprises to sellers of scrapped products by natural persons

State Administration of Taxation: Clarify the implementation measures for "reverse invoicing" of resource recovery enterprises to promote large-scale equipment renewal and trade-in of consumer goods, and help improve the efficiency and environment

》State Administration of Taxation: Realize "reverse invoicing" of resource recovery enterprises by the end of April

Hu Jinglin, Secretary of the Party Committee and Director of the State Administration of Taxation, presided over a symposium on promoting large-scale equipment renewal and trade-in of consumer goods related industry associations and enterprises on April 9, emphasizing that the Party Central Committee and the State Council attach great importance to the development of the resource recycling industry, and have deployed and implemented a series of tax support policies in recent years, which have effectively promoted the development and growth of enterprises in related industries. This year, policy support has been further strengthened, especially in terms of taxation, which clearly requires the promotion of "reverse invoicing" measures by resource recovery enterprises to sellers of scrapped products by natural persons. The tax department is in full swing to implement, actively carry out the improvement of relevant business systems and the upgrading of information systems, etc., before the end of April to achieve "reverse invoicing" of resource recovery enterprises, and through the implementation of "reverse invoicing" to further smooth the VAT deduction chain, give resource recovery enterprises standardized and legal enterprise income tax pre-tax deduction vouchers, and at the same time allow natural persons who continue to carry out the business of selling scrapped products can also enjoy VAT exemption or reduction policies in accordance with the current tax law. On this basis, the tax department will also rely on tax big data to accurately screen taxpayers who meet the conditions for enjoying preferential policies, strengthen publicity and counseling services, ensure that taxpayers understand the policy and know how to operate, and create a good tax environment for the accelerated development of the whole industrial chain of the resource recycling industry with the smooth operation of tax policies, the continuous optimization of service measures, and the national unification of law enforcement standards, and help greatly improve the quality and level of national economic circulation. At the same time, with regard to the illegal acts of lawbreakers using "reverse invoicing" and the "policy depressions" caused by illegal local investment promotion, we will further give full play to the role of the normalized working mechanism of the eight departments of taxation and public security to jointly crack down on tax-related violations and crimes, and maintain a high-pressure deterrent of cracking down on them when they appear; Where rewards and subsidies are conducted, actively cooperate with relevant departments to increase the intensity of handling in accordance with law and pursue corresponding responsibility, strive to maintain a fair market competition environment under the rule of law, promote the formation of a virtuous circle of "good money drives out bad money", more resolutely and forcefully promote the construction of a unified national market, and make greater contributions to accelerating the construction of a new development pattern and promoting high-quality development.

What is reverse invoicing?

Article 18 of the Measures of the People's Republic of China for the Administration of Invoices clearly stipulates that if a unit or individual sells goods, provides services or engages in other business activities collects money for business operations, the payee shall issue an invoice to the payer, and under special circumstances, the payer shall issue an invoice to the payee. Here, "the payer issues an invoice to the payee" is "reverse invoicing".

Specifically, typical industries and fields involving reverse invoicing include: in the purchase of agricultural products, because farmers may not be able to issue invoices directly, the acquirer will issue them on behalf of them for the purpose of management and taxation; in terms of second-hand car transactions, when a registered automobile sales enterprise purchases a second-hand car from a natural person, it may adopt this method; in terms of waste material recycling, when a resource recovery enterprise purchases scrap aluminum and other waste materials from an individual, in order to regulate the market and encourage recycling, reverse invoicing will also be implemented; for distributed photovoltaic power generation projects, the State Grid Corporation of China may also adopt this method when purchasing power products from distributed photovoltaic power generation projects。

》SMM: Recycling, Utilization and Prospect of Recycled Copper Raw Materials in China [SMM Copper Summit]

Liang Kaihui, senior analyst of SMM copper, mentioned in the analysis of the recycling, utilization and outlook of China's recycled copper raw materials at the 2024 (19th) SMM Copper Conference and Copper Industry Expo - Copper Raw Materials and Consumption Development Forum jointly organized by Shanghai Nonferrous Metals Network (SMM) and Shandong Hengbang Smelting Co., Ltd. It can not only effectively reduce the tax burden of resource recovery enterprises, but also greatly reduce the tax risk of illegal deduction due to failure to obtain pre-tax deduction vouchers. At the same time, the promotion of the "reverse invoicing" policy can further enhance investors' confidence in the waste goods recycling industry, help encourage more enterprises and individuals to participate in the recycling of waste goods, attract more capital into the renewable resources industry, and promote the recycling of resources. At present, with regard to the "reverse invoicing" of resource recovery enterprises to sellers of scrapped products by natural persons, the State Development [2024] No. 7 document only makes provisions in principle, and the relevant normative documents have not yet been promulgated, and the specific policy details need further attention. In short, "reverse invoicing" will help improve renewable resources to solve the problem of invoice recycling from the source, improve the efficiency of the domestic recycling system and better monitor the tax issues of the recycling industry.

》SMM: What is the impact of the State Council's proposal for enterprises to implement "reverse invoicing" to sellers on aluminum scrap enterprises?

The Party Central Committee and the State Council attach great importance to the development of the resource recycling industry, and the tax department is in full swing to implement the "reverse invoicing" of resource recovery enterprises before the end of April, and further smooth the VAT deduction chain through the implementation of "reverse invoicing", and give resource recovery enterprises standardized and legal pre-tax deduction vouchers for enterprise income tax, and at the same time, natural persons who continue to carry out the business of selling scrapped products can also enjoy VAT exemption or reduction policies in accordance with the current tax law. What are the implications for aluminium scrap related companies?

1. Impact on aluminum scrap recycling enterprises:

(1) Standardization of pre-tax deduction vouchers: Resource recovery enterprises will obtain standardized and legal pre-tax deduction vouchers for enterprise income tax, which will help reduce the income tax burden of enterprises and improve their profitability.

(2) Selection of simplified VAT collection method: Enterprises engaged in scrap aluminum recycling can choose to apply the simplified tax calculation method to calculate and pay VAT at the rate of 3%, or apply the general tax calculation method to calculate and pay VAT. This provides enterprises with flexible tax treatment and can choose the appropriate tax payment method according to different business conditions and market conditions.

(3) Immediate refund policy: For enterprises that meet specific qualifications, they can enjoy the immediate refund policy, and the value-added part of VAT can enjoy immediate refund, which will further reduce the tax burden of enterprises.

2. Impact on aluminum scrap procurement enterprises:

(1) Improved tax compliance: Purchasing companies need to ensure that transactions with natural persons or resource recovery enterprises that sell aluminum scrap comply with tax regulations, so as to avoid tax risks due to non-compliant operations.

(2) Cost management optimization: The invoices obtained through legal channels can be used for VAT deduction, which helps to reduce the operating costs of enterprises.

(3) Supply chain management adjustments: In order to ensure that "reverse invoicing" can be obtained in line with the policy, procurement enterprises may need to adjust their supply chain management strategies and establish closer cooperation with compliant resource recovery enterprises.

(4) Changes in the market competition pattern: The implementation of policies may raise the market entry threshold, promote more fair and standardized competition in the industry, and non-standard enterprises will face greater pressure, while compliant enterprises will have the opportunity to gain more market share.

In addition, Circular 7 also clarifies specific quantitative targets by 2027, including increasing the recycling of end-of-life vehicles and used household appliances, improving environmental performance and digitalization of industrial enterprises, the achievement of these goals is inseparable from the effective recycling of resources such as aluminum scrap.

Through the practice of "reverse invoicing", resource recovery companies issue invoices to sellers when purchasing scrapped products, and sellers can use this invoice to enjoy tax benefits when paying individual income tax. This will effectively reduce the cost of natural persons participating in scrap aluminum recycling, improve their enthusiasm, and is expected to open a new chapter in the recycling of scrap aluminum resources.

As the country accelerates the construction of a circular economy system, the renewable resource recycling industry has become an important part of the circular economy. In recent years, the recycling industry has shown a strong momentum of development, but at the same time, the lack of invoices has also become an important factor restricting the healthy development of the industry.

》 After the announcement of the "reverse invoicing" policy, what is the current attitude of the recycled lead industry?

Recently, the State Administration of Taxation announced the "reverse invoicing" of resource recovery enterprises to natural persons and sellers of scrapped products. The introduction of this policy has attracted much attention from the recycling industry. Waste lead-acid batteries are hazardous waste and need to be sold in accordance with this policy. However, due to the short time of policy announcement, the market generally has a wait-and-see attitude.

According to SMM research, large-scale recycling traders & recycled lead refineries in the waste battery market have basically stopped purchasing waste batteries, and some small and medium-sized recyclers continue to purchase waste batteries without tickets.

》Zhang Tianren suggested: improve the tax policy of renewable resources to help the development of circular economy

In March 2023, the Ministry of Finance issued the Announcement on Improving the VAT Policy for Comprehensive Utilization of Resources (Announcement No. 40 of 2021 of the State Administration of Taxation of the Ministry of Finance, hereinafter referred to as "Announcement No. 40"), which clearly states that enterprises must obtain legal and valid vouchers such as VAT invoices and collection vouchers issued by the seller in the process of purchasing renewable resources. This means that obtaining legal and valid certificates is the red line for enterprises with comprehensive utilization of resources to enjoy the preferential treatment of immediate levy and refund.

However, most of the upstream suppliers of renewable resource recycling enterprises are retail recyclers of renewable resources, and it is difficult to provide compliant invoices. In the entire deduction chain, the lack of compliant "starting invoices" affects the effect of tax law compliance of renewable resource recycling enterprises.

In order to better reflect the regulation and guidance of fiscal and taxation policies on the industry, and better create a benign development environment and a fair competition environment for enterprises, Zhang Tianren, a representative of the National People's Congress and chairman of Tianneng Holding Group, put forward a proposal to improve the tax policy on renewable resources to help the development of circular economy during the two sessions in 2024. Zhang Tianren put forward the problems of current industrial development, first, it is difficult for the transaction partners of the renewable resource recycling industry to provide relevant invoices. Second, the pre-tax deduction of self-made vouchers of enterprises is not recognized by the tax authorities. Third, the implementation of tax collection and management in different regions leads to greater risks for enterprises. Zhang Tianren believes that the recycling of renewable resources has become an important part of the construction of ecological civilization to promote resource conservation and reduce environmental pollution. The development of the renewable resource recycling industry is highly related to tax management, and it is also a difficult point in tax management. To solve the tax problems faced by the recycling of renewable resources and explore effective ways to help the healthy development of the industry, both tax and enterprise efforts are required.

According to this, Zhang Tianren suggested that the following schemes can be adopted to improve the tax policy of renewable resources and solve the problem that large-scale renewable resource recycling enterprises are difficult to obtain input invoices, especially the problem of pre-tax deduction vouchers: Plan 1: Pilot enterprises open on behalf of others. Referring to the idea of Internet logistics platform enterprises issuing special invoices for small-scale taxpayers in the cargo transportation industry, large-scale renewable resource recovery enterprises that meet the specified conditions can issue invoices for small-scale taxpayers of renewable resource recovery on a pilot basis, so as to extend the VAT deduction chain of the renewable resource recovery industry and solve the problem of legal vouchers for pre-tax deduction. Solution 2: A third party opens on behalf of the customer. Small-scale taxpayers (sellers) of renewable resource recycling can issue invoices in the name of sellers by third-party platforms. That is, when signing the purchase and sale agreement, it is agreed to perform the invoicing obligation, and when the actual business transaction occurs, a third party is allowed to issue invoices in the name of the seller and transfer them to the recycling enterprise. Plan 3: Self-made voucher deduction. Recycling enterprises with a certain amount of money are allowed to make pre-tax deductions for purchase vouchers, that is, under the premise that the recycling enterprises do have real expenditures, have an internal control process to prove the authenticity of the purchase and sale business, and have information such as capital flow, invoice flow, logistics, etc., if the monthly sales amount of a single investor is below the limit (such as less than 100,000 yuan), the internal acquisition voucher can be filled in for pre-tax deduction. Option 4: Approved collection. According to the actual profits of recovery enterprises in different industries, the taxable income rate shall be determined in a unified manner, and the enterprise income tax shall be levied according to the method of verification and collection according to the taxable income rate.

To learn more about the impact of "reverse invoicing" on the recycled metal industry, please participate in the 2024 Global Recycled Metal Industry Chain Summit Forum~

As an important part of the global economy, the recycled metal resources industry is playing an increasing role in industrial production. With the strengthening of environmental protection policies and the deepening of the energy crisis, renewable metal resources have their incomparable environmental protection and economy. However, the development of the recycled metal resources industry also faces some difficulties and challenges. Especially in the context of globalization, the development of the recycled metal resources industry is no longer limited to a single country or region, but involves global interest identification, resource sharing and technical exchanges. At the same time, issues such as the recycling of recycled metal resources and the formulation of industry standards also need to be negotiated and solved by countries around the world. Especially at present, the supply of recycled metals around the world is becoming increasingly tight, and optimizing the industrial chain structure of the recycled metal resources industry has become an urgent need for the current industry. In order to strengthen the exchange and cooperation of international industry colleagues and respond to future industrial changes, strengthen the collaborative exchanges of the industrial chain, communicate with each other, and have a deeper and comprehensive understanding of the policy guidance and market development of renewable metal resources on a global scale, the China Renewable Resources Industry Technology Innovation Strategic Alliance and Shanghai Nonferrous Metals Information Technology Co., Ltd. jointly plan to hold the 2024 Global Renewable Metal Industry Chain Summit Forum in Malaysia from June 24 to 28, 2024, which will discuss the current situation and future development trend of the recycled metal industry from a global perspective, and promote the cooperation and exchange of relevant enterprises around the worldAn important platform for sharing successful experiences and discussing the development of the industry. SMM hopes that through this conference, we can give full play to the complementary advantages of different countries and regions in the renewable metal resources industry and jointly promote the healthy and sustainable development of the renewable metal resources industry. Looking forward to working with all colleagues to seek a global development blueprint for the industry!