Explanation of Announcement of the State Administration of Taxation [2017] No.16

Date:  2017-06-30    Autor:   BO, Bob

Policy Stipulation

This article shall deal with the “Announcement of theState Administration of Taxation on Matters Regarding the Issuance ofValue-added Tax Invoices” as was issued mid-May and from 1 July onwards willchange regulations regarding ordinary VAT invoices issued in the name ofcompanies.

In order to further strengthen the management ofvalue-added tax (VAT) invoices, guarantee the smooth implementation of thepilot of VAT in lieu of business tax on an overall basis, protect the legitimaterights and interests of taxpayers and create a healthy and fair taxenvironment, issues regarding VAT invoice issuance are announced as follows:

I. From July 1, 2017, when an enterprise purchaserasks for an ordinary VAT invoice, it shall provide the seller with its taxpayeridentification number or unified social credit code; at the same time, theseller shall indicate the purchaser's taxpayer identification number or unifiedsocial credit code in the column of "the purchaser's taxpayer identificationnumber" when issuing ordinary VAT invoices. Invoices that are not soissued may not be taken as tax evidence. For the purpose hereof, enterprisesinclude companies, non-corporate business entities, branches of firms,individual business establishments, partnerships and other enterprises.

II. When a seller issues VAT invoices, the contentthereof shall state the actual sales information, and the seller may not fillin any content which is in conflict with the actual transaction as required bythe purchaser. When a seller issues invoices by introducing the relevantinformation after its sales platform system is connected to the VAT invoice taxcontrol system, the content on the invoices imported by the system are requiredto be consistent with the actual transaction. Otherwise, the sales platformsystem shall be modified and improved in time.

The Announcement is hereby given.


I.             The Announcement only applies to the ordinaryVAT invoices issued on and after July 1st, 2017. For the ordinary VAT invoices,which are issued on and before June 30th, 2017, it is not obligated to indicatethe purchaser's taxpayer identification number or unified social credit code.

II.            The announcement is aimed at enterprises,including companies, non-corporate legal persons, enterprise branches,individual proprietorship enterprises, partnerships and other enterprises. Thenon-enterprise units in the government and institutions are not explicitlymentioned. Therefore, this announcementis not applicable to the ordinary VAT invoices issued to individuals andnon-enterprise units. Besides, if the purchaser is a foreign customer, theannouncement is also not applicable.

III.           The announcement emphasizes only therequirements for ordinary VAT invoices. The so-called ordinary VAT invoice,including paper ordinary invoice, electronic ordinary invoice and rolling-typeinvoice, is the same as special VAT invoice, which is issued through theVAT-tax control system. The similarity of the ordinary VAT invoice’s format andspecial VAT invoice’s is very high. Both have a column indicated "buyer’staxpayer identification number", but the name of the invoice is "XXordinary VAT invoice", such as "Shanghai ordinary VAT invoice”. Inaddition to the ordinary VAT invoice, there are other general invoices. Thisinvoice contains three categories: general machine-printing invoice, generalmanual invoice and general fixed-sum invoice. Its invoice name is "XXProvince (city) National Taxation Bureau General Machine-printinginvoice", "XX Province (city) National Taxation Bureau General manualinvoice", ”XX Province (city) National Tax Bureau general fixed-suminvoice". Thus, the ordinary VAT invoice and the general invoice are twodifferent concepts and cannot be considered together. This announcement is notapplicable to general invoice without the column indicated "buyer'staxpayer identification number". Parking invoice with fixed-sum, manualinvoice, taxi invoice, train ticket, and so on in daily life, belong to generalinvoice, There is no need to provide buyer’s taxpayer identification number orunified social credit code.

IV.          Atmoment, the announcement is only mandatory to fill in the taxpayeridentification number or the unified social credit code. As for whether to fillin the contact address, the telephone number and the bank's information at thesame time, the announcement is not mandatory

V.           The announcement emphasizes thatinvoices that are not up to the prescribed regulations shall not be used as taxcertificates for tax related businesses, such as tax payment, tax refund, taxdeductible, etc. For example, the ordinary VAT invoice for meal, its input VAT isnot deductible, but the total amount can be used as business entertainment withinreasonable limit and is deductible from the profit before enterprise incometax. Moreover, even if the business entertainment expenses beyond thereasonable limit occurred, the enterprise income tax shall be paid for part ofexpenses over the limit in accordance with the regulations. Therefore, the announcement is mainly from theperspective of tax related business to emphasize ordinary VAT invoices as taxreceipts

VI.          The second article of this announcement emphasizesthat the invoice content should be issued according to the actual salescontent, which mainly aims at the era of online-shopping. Many companies sellsvia Internet and the content category for invoicing is set in advance and canbe chosen by consumers, such as "office supplies","material" and "computer accessories", which is a loophole.Therefore, the tax authorities want to use this announcement to make up forthis loophole, The enterprises must ensure that the sales system and issuedcontent of VAT invoices are consistent and cannot allow consumers to changeinvoice content category by themselves. The invoice should be issued accordingto the actual content of the business. If not to do so, it is "falseinvoices". For those companies, whose actual business is office supplies,it is possible to issue invoices with content of office supplies. According tothe “tax classification and coding of goods and services”, one of the detailedcategories is "paper stationery and office supplies". Therefore, theinvoice content of "paper stationery and office supplies" meets therequirements of tax authorities. In fact, regardless of the internal controlmanagement point of view or from the tax management point of view tounderstand, regardless of the value, office supplies should be issued indetailed list. For a small number of office supplies, one can list specificnames directly in the invoice, such as glue, paper clips, stapler etc.; forthose with lots of office supplies, a detailed list can be attached, but thelist must be issued from the tax control system.

The conclusion is, just like buying air tickets andtrain tickets, for which an identity card number needs to be provided,"the purchaser's taxpayer identification number" must be stated inorder to obtain VAT invoices, which is in fact not as scary as we imagine. Toallow enterprise taxpayers in dealing with tax related matters, providing andfilling in the taxpayer identification number, becomes standard action anddevelops law-abiding good habits as well. We recommend that the company makesinvoice information to a small card or a two-dimensional code, and thendistributes to all employees or let employees save the code in the mobilephone. During asking for invoice, just let the seller sweep to input invoiceinformation.

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