How to apply for reverse invoicing? Get approval first, then verify the authenticity of transactions

How to apply for reverse invoicing? The correct order is to obtain qualification first, then perform verification and invoicing for each authentic transaction.

Reverse invoicing for resource recycling is not a general-purpose tool for "issue an invoice whenever one is missing." State Taxation Administration Announcement No. 5 of 2024 clarifies the invoicing party, seller, and scope of scrapped products; agricultural product purchase invoices belong to another existing set of rules, and the application conditions and management definitions cannot be mixed.

▍1. First confirm business and qualification conditions

Resource recycling enterprises implementing reverse invoicing can be either units or individual industrial and commercial households, but they should actually engage in resource recycling business and meet the corresponding industry conditions: hazardous waste collection, scrapped motor vehicle recycling, and other renewable resource recycling correspond respectively to requirements such as permits, qualification recognition, or business entity registration and commerce filing. Enterprises cannot presume that they already have reverse invoicing qualification solely based on a broad business scope in their business license.

▍2. Submit application materials to the competent tax authority

State Taxation AdministrationInterpretation of the Measures for the Implementation of Reverse InvoicingClearly, eligible enterprises may submit the Resource Recycling Enterprise "Reverse Invoicing" Application Form to the competent tax authority, and provide corresponding materials such as a hazardous waste operation permit, a qualification recognition certificate for scrapped motor vehicle recycling and dismantling enterprises, or a renewable resource recycling operator filing registration certificate from the commerce department. The specific processing entry, material carrier, correction requirements, and time limits shall be subject to the current tax handling guide of the enterprise's competent tax authority.

▍3. It can only be carried out after review and approval by the tax authority

Submitting an application does not mean automatic approval, nor can an enterprise issue invoices first and supplement qualifications later before the review result is available. If an approved enterprise has changes in the relevant certificate number, the category of recycled scrapped products, the applicable tax calculation method, or whether to continue reverse invoicing, it should report or handle adjustments promptly as required by the competent tax authority.

▍4. Each transaction still needs verification of the seller and goods

The invoice recipient should be an individual seller of scrapped products within the policy scope, and the goods should be scrapped products that have lost all or part of their original use value. Enterprises should also pay attention to the boundary of the cumulative sales amount for reverse invoicing by an individual over no more than 12 consecutive months. If there are conflicts in identity, goods category, sales amount, or transaction materials, invoicing should be suspended and manually verified.

▍5. Keep authentic transaction materials and establish a purchase ledger

State Taxation Administration Announcement No. 5 of 2024Enterprises are required to keep materials that can prove the authenticity of the business, including purchase contracts or agreements, transportation invoices or vouchers, goods weighing slips, transfer payment records, etc., and establish a purchase ledger recording the time, location, seller and contact information, name, quantity, and price of scrapped products for each transaction. If existing account books or systems already contain the required content, there is no need to create a duplicate ledger.

▍6. After approval, issue invoices online and handle tax and fee agency matters

For verified transactions, issue invoices online with the words "scrapped product purchase" through the electronic invoice service platform or the VAT invoice management system, and select commodity codes according to regulations. Resource recycling enterprises should also handle VAT and surtax filing matters and individual income tax filing matters for sellers. Kailing TechnologyReverse Invoicing SolutionWithin the scope of enterprise authorization and project configuration, it can connect application materials, transaction review, invoicing results, tax and fee status, and ledgers, but it cannot replace the review by the competent tax authority or the enterprise's responsibility for the authenticity of transactions.

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