Detailed explanation of the voiding process for fully digitalized e-invoices, a must-read for finance professionals

Many finance staff habitually click the "void" button, only to find that fully digitalized e-invoices simply do not have this option. Once a fully digitalized e-invoice is issued, it cannot be directly voided and must be handled through reversal. Improper operation may lead to tax anomalies or even fines. In fact, the "voiding" of a fully digitalized e-invoice is red-letter reversal. The process is simple but attention must be paid to timeliness and conditions. Kailing Technology sorts out the complete process for you to help you operate compliantly.

▍1. Why can't fully digitalized e-invoices be directly voided?

According to the regulations of the State Taxation Administration, fully digitalized e-invoices (fully electronic invoices) adopt a "code assignment system," where each invoice has a unique code and is brought under tax system supervision once issued. Direct voiding would cause inconsistency between invoice data and the tax system, creating risks. Therefore, fully digitalized e-invoices can only be offset by issuing red-letter fully digitalized e-invoices (red-letter reversal).

▍II. What are the applicable scenarios for red-letter reversal of fully digitalized e-invoices?

Red-letter reversal applies to the following situations: sales returns, invoicing errors, suspension of taxable services, sales allowances, etc. Note that if the original invoice has already been deducted or booked, the buyer must initiate the red-letter reversal application; if it has not been deducted or booked, the seller may initiate it. Red-letter reversal must be carried out in the month the blue invoice is issued or across months, but cross-month red-letter reversal requires attention to tax filing adjustments.

▍III. What is the specific process for red-letter reversal of fully digitalized e-invoices?

Step 1: Log in to the electronic tax bureau and enter the "Tax Digital Account" module; Step 2: Select "Red-Letter Invoice Confirmation Information Entry" and fill in the original invoice code, number, etc.; Step 3: Submit the confirmation information. If counterparty confirmation is required, wait for the buyer to confirm; Step 4: After confirmation is passed, issue the red-letter fully digitalized e-invoice, and the system automatically offsets the original invoice amount. The entire process is completed online, with no paper materials required.

▍IV. What precautions apply to red-letter reversal operations?

First, the red-flush reason must be authentic, and red-flushing must not be done arbitrarily; second, after red-flushing, the original invoice can still be queried, but its status changes to "red-flushed"; third, cross-month red-flushing requires adjusting VAT within the filing period; fourth, some industries (such as agricultural product procurement) have special rules for red-flushing. It is recommended that finance personnel use professional tools such as Kailing Technology's fully digitalized e-invoice management system to automatically validate red-flush rules and avoid errors.

Keywords: Voiding fully digitalized e-invoices, red-letter reversal of fully digitalized e-invoices, red-letter reversal process, fully digitalized invoices, invoice management, tax compliance, Kailing Technology