Regulations and impacts of fully digitalized e-invoices

Fully digitalized e-invoices have gradually become widespread. Based on relevant materials released by tax bureaus in various regions, this article introduces important issues related to fully digitalized e-invoices and, on how to understand the impact of fully digitalized e-invoices, includes expert interpretation. This article includes the following questions:

I. What is a fully digitalized electronic invoice?

II. What is the difference between fully digitalized e-invoices and electronic invoices?

III. How to issue fully digitalized e-invoices?

IV. How is the issuance quota of fully digitalized e-invoices determined?

V. How do I adjust the total invoice issuance quota?

Six, Several issues related to red-letter fully digitalized e-invoices

Seven, Definition and functions of the tax digital account

Eight, How do I understand the impact of fully digitalized e-invoices?

I. What is a fully digitalized electronic invoice?

In the materials, the tax bureau defines fully digitalized e-invoices as:

Fully digitalized e-invoices are a new type of invoice with the same legal effect as paper invoices. They do not exist in paper form, require no medium support, and need no application for issuance, invoice verification, or application for increased version or quantity. The face information of paper invoices is fully digitalized, and multiple invoice types are integrated and merged into a single e-invoice type. Fully digitalized e-invoices implement nationwide unified coding and automatic circulation and delivery.

The definition is long, but what is the core content? Full digitalization of invoice information.

So the simple and accurate definition of a fully digitalized electronic invoice (abbreviated as fully digitalized e-invoice or fully electronic invoice) is: an electronic invoice whose face information is fully digitalized.

II. What is the difference between fully digitalized e-invoices and electronic invoices?

The difference between fully digitalized e-invoices and electronic invoices issued using tax control devices is reflected in two aspects: different management methods; different invoice delivery methods.

(1) Different management methods

With fully digitalized e-invoices, after a taxpayer starts business, there is no need to use special tax control equipment, no need to process invoice type verification, and no need to obtain all-electronic invoices; the system automatically grants an issuance quota and dynamically adjusts the total issuance amount quota based on taxpayer behavior, enabling invoicing upon starting business.

For electronic invoices issued using tax control equipment (hereinafter referred to as "paper-electronic invoices"), after the taxpayer starts business, it must first apply for tax control dedicated equipment and conduct invoice type verification. Invoice quantity and face amount limit management are the same as paper invoices, and taxpayers need to apply to increase invoice version and quantity, which is electronification under the paper invoice management model.

(2) Different invoice delivery methods

After a fully digitalized e-invoice is issued, the invoice data file is automatically sent to the tax digital accounts of the issuer and the recipient, facilitating delivery and recording and reducing manual sending and receiving. At the same time, relying on the tax digital account of the electronic invoice service platform, taxpayers can automatically collect various invoice data, making invoice data use more efficient and convenient.

After the "paper-electronic" invoice is issued, it needs to be delivered via the invoice layout file. That is, the invoicing party delivers the invoice layout file to the invoice recipient via email, SMS, etc.; after manual download by the recipient, operations such as collection, organization, and booking of the invoice layout file are still required.

III. How to issue fully digitalized e-invoices?

Includes questions such as what system or software to use for invoicing and what type of invoice to issue.

(1) What tax control equipment is used to issue fully digitalized e-invoices?

Pilot taxpayers can issue fully digitalized e-invoices without obtaining tax control dedicated equipment. Tax authorities provide issuance, verification, and delivery services for fully digitalized e-invoices free of charge, reducing taxpayers' invoice usage and management costs.

(II) What invoicing software is used to issue fully digitalized e-invoices?

Can directly use the e-invoice service platform (login method and address determined by each pilot province) to issue fully digitalized e-invoices free of charge, without using other specific invoicing software.

The E-invoice Service Platform supports the issuance of fully digitalized e-invoices, paper special VAT invoices, and paper general VAT invoices.

(3) Can electronic invoices continue to be issued?

Pilot taxpayers can issue motor vehicle sales unified invoices, used vehicle sales unified invoices, VAT ordinary invoices (roll invoices), VAT electronic special invoices, VAT electronic ordinary invoices, and toll roadtoll VAT electronic ordinary invoices through the VAT invoice management system.

IV. How is the issuance quota of fully digitalized e-invoices determined?

Running out of invoices is a common problem many taxpayers encounter. Suspending your invoices is a common measure used by tax authorities to punish taxpayers.

(1) Three types of quotas

The invoice issuance amount quota includes three categories: total invoice issuance amount quota, initial total invoice issuance amount quota, and remaining available quota.

(II) Total invoice amount quota

Also called the total credit limit, it refers to the upper limit of the total invoice issuance amount (excluding VAT) of a pilot taxpayer within one natural month. Fully digitalized e-invoices, paper special VAT invoices (hereinafter referred to as paper special invoices), and paper general VAT invoices (folded invoices, hereinafter referred to as paper general invoices) issued by pilot taxpayers through the electronic invoice service platform, as well as paper special invoices, paper general invoices, general VAT invoices (roll invoices), electronic special VAT invoices, and electronic general VAT invoices issued through the VAT invoice management system, share the same total invoice issuance amount limit.

(3) Initial total issuance amount limit

It refers to the upper limit of the invoice issuance amount for the current month granted to a pilot taxpayer by the electronic invoice service platform when the taxpayer first uses fully digitalized e-invoices.

(4) Remaining available quota

It refers to the remaining amount after deducting the used quota from the total amount quota for various invoices that a pilot taxpayer may issue within one calendar month.

(5) No limit on the number of copies or the amount per invoice

For fully digitalized e-invoices issued through the electronic invoice service platform, within the total issuance amount limit, there is no limit on the number of invoices issued or the single-invoice issuance limit.

(6) Limitation of the quota before tax filing

Assume the taxpayer files monthly, and the invoicing quota is the same every month. However, before tax filing, the taxpayer's invoicing quota is restricted, and invoices can only be issued within the remaining quota from the previous month.

(7) Restoration of quota after completing the declaration

After the taxpayer completes the filing, the normal invoicing quota is restored, and invoices are issued within the remaining quota equal to the current month's quota minus the amount already invoiced in the current month.

V. How do I adjust the total invoice issuance quota?

What to do when the invoice quota is insufficient? How to adjust the quota?

(1) How Many Adjustment Methods Are There?

There are three ways to adjust the total invoice issuance amount limit, including regular adjustment, temporary adjustment, and manual adjustment.

1、 Periodic adjustment

Periodic adjustment means the electronic invoice service platform automatically adjusts the total invoicing amount limit of pilot taxpayers each month.

2、 Temporary adjustment

Temporary adjustment means that when the invoice amount issued by a pilot taxpayer with a relatively low tax risk reaches a certain proportion of the total invoice amount limit for the first time, the electronic invoice service platform automatically increases the total invoice amount limit once temporarily for that month.

3、 Manual adjustment

Manual adjustment means that a pilot taxpayer applies to adjust the total issued amount quota due to changes in actual business conditions, and if the competent tax authority finds no abnormality upon review in accordance with laws and regulations, it shall adjust the total issued amount quota for the taxpayer.

(2) Under what circumstances can manual adjustment be made?

If the total issuance amount limit of a pilot taxpayer is insufficient and remains insufficient after automatic system adjustment, the taxpayer may apply to the competent tax authority for adjustment of the total issuance amount limit. The tax authority will adjust the total issuance amount limit based on factors such as the taxpayer's risk level, tax credit rating, and actual business conditions.

(3) How to apply for manual adjustment?

Pilot taxpayers apply to adjust the total issuance amount limit through the "Tax Digital Account—Credit Limit Adjustment Application" module of the electronic invoice service platform. After filling in the adjustment reason and uploading relevant attachments, the manual adjustment process can be initiated.

(4) Probationary-period taxpayers adjusting quotas and prepaying VAT

If a pilot taxpayer is a general taxpayer in the probation period, such as a commercial enterprise, when applying for manual adjustment of the total issuance amount limit for the first time in a month, or when obtaining VAT special invoices for the second time in a month, it shall prepay VAT at 3% of the sales amount of fully digitalized e-invoices bearing the words "VAT Special Invoice" already issued in the current month and VAT special invoices already obtained and issued.

Prepaying VAT helps prevent losses caused by taxpayers issuing false invoices and absconding.

Six, Several issues related to red-letter fully digitalized e-invoices

Taxpayers also face the issue of issuing red-letter fully digitalized e-invoices.

(1) Circumstances under which a red-letter fully digitalized e-invoice may be issued

Under general circumstances, when a pilot taxpayer has sales returns, incorrect invoicing, service suspension, sales discounts, etc., a red-letter fully digitalized e-invoice may be issued according to regulations.

An invoice is proof of commercial activity. If a commercial activity for which an invoice has already been issued changes, such as a return, error, or termination, a red-letter fully digitalized e-invoice must be issued.

(2) Circumstances under which red-letter invoices are not allowed to be issued

However, red-letter fully digitalized e-invoices are not allowed to be issued under the following circumstances:

1、 Status of the blue-letter invoice

When a blue-letter invoice has been voided, fully red-offset, determined as an abnormal tax deduction voucher, or locked (a red-letter confirmation form or information table has been initiated but no red-letter invoice has been issued, and the red-letter confirmation form or information table has not been revoked), initiating a red offset is not allowed.

2、 Use of the blue-letter invoice

When the VAT use of a blue-letter invoice is "pending tax refund", "tax refunded", "deducted (changed to refund)", "tax refund on behalf", or "no tax refund and no deduction", initiating a red offset is not allowed;.

3、 Status of one transaction party

When initiating red-letter reversal, if the counterparty taxpayer is in a status such as "abnormal" or "deregistered" and cannot log in to the system to perform relevant operations, red-letter reversal is not allowed.

4、 Incentive tag type

Among the tax preference labels of a blue-letter invoice, when the "Winter Olympics tax refund label" is "Winter Olympics tax refund applied", initiating a red offset is not allowed.

(3) How to select the reason for red-letter reversal?

The reason for red-flush reversal should be determined by the taxpayer based on the actual business situation. Note that if the commodity and service code of the original blue invoice is only goods or labor, "service termination" cannot be selected as the red-flush reason; if the commodity and service code is only services, "sales return" cannot be selected as the red-flush reason.

(4) Red-letter reversal rules between invoice types

The red-ink reversal rules between invoice types are "new reverses old, electronic reverses paper."

Specific details are as follows:

Fully digitalized e-invoices can issue red-letter reversals for fully digitalized e-invoices, fully digitalized paper invoices (electronic invoice service platform

issued paper invoices) and tax-control invoices for red-letter reversal;

A fully digitalized electronic paper invoice can be red-letter reversed against fully digitalized electronic paper invoices and tax control invoices, but red-letter reversal against fully digitalized e-invoices is not allowed;

Tax control invoices may only be red-letter reversed against tax control invoices, and may not be red-letter reversed against fully digitalized e-invoices or fully digitalized paper invoices.

(5) Is confirmation by the other party required?

When the invoice recipient has not confirmed the use, the issuer initiates the Red-Letter Information Confirmation Form through the electronic invoice service platform and then issues a full red-letter fully digitalized e-invoice without the recipient's confirmation.

When the invoice recipient has confirmed the use, either the purchaser or seller may initiate the Red-Letter Information Confirmation Form on the electronic invoice service platform (when the recipient is a non-pilot taxpayer, initiate and confirm on the VAT Invoice Comprehensive Service Platform); after confirmation by the other party, a full or partial red-letter fully digitalized e-invoice may be issued.

(6) Is there a time limit for the other party's confirmation?

Yes. After initiating the red-letter reversal process, the invoicing party or the invoice recipient must confirm within 72 hours. If not confirmed within the specified time, the process is automatically voided, and if a red-letter invoice needs to be issued, the process should be re-initiated.

So after initiating the red invoice issuance process, promptly notify the other party to confirm. Otherwise, the process becomes invalid.

Seven, Definition and functions of the tax digital account

The functions of the E-invoice Service Platform Tax Digital Account are somewhat similar to a settlement account opened by an enterprise at a bank.

(1) Definition of the tax digital account of the electronic invoice service platform

The E-invoice Service Platform Tax Digital Account is an application system for pilot taxpayers and fee payers that collects various tax- and fee-related data and integrates query, invoice use, and business application.

(II) Tax Digital Account Functions of the Electronic Invoice Service Platform

The E-invoice Service Platform Tax Digital Account provides pilot taxpayers with:

Services such as invoice collection, purpose confirmation, query, download, and printing.

When pilot taxpayers issue and obtain various types of invoices, the system automatically collects invoice data and pushes it to the corresponding taxpayer's tax digital account, fundamentally solving problems such as loss, damage, and difficulty in collecting electronic invoices that arise in taxpayers' paper invoice management.

Supports taxpayers in confirming the purpose of and querying all invoices; for fully digitalized e-invoices, also supports download and printing. It also meets taxpayers' needs for marking already-booked invoices, querying tax matter notices, querying tax policies, applying for adjustments to total invoice issuance limits, applying for issuance of invoices at original tax rates, and handling customs payment certificate business, providing taxpayers with efficient and convenient invoice services.

Eight, How do I understand the impact of fully digitalized e-invoices?

What do fully digitalized e-invoices mean?

For taxpayers: first, it is simpler; second, problems are easier to discover.

For tax authorities: monitoring capabilities and collection and management capabilities are stronger.

For declaration purposes, the quota rules before and after declaration help prompt taxpayers to declare in a timely manner and prevent tax evasion.

Company A is a general taxpayer filing monthly. In October 2023, the total invoicing amount limit was 7.5 million yuan. As of October 31, the actual used limit was 4 million yuan, and the remaining available limit was 3.5 million yuan.

On November 1, the electronic invoice service platform automatically calculated the total invoicing amount quota for November as 7.5 million yuan. For Company A, the quota before and after the November filing is different.

Assume Company A completes the VAT filing for the October period and passes comparison at 9:00 on November 11. Then before 9:00 on November 11, the available quota is 3.5 million yuan (7.5-4).

If from November 1 to 9:00 on November 11, Company A has actually used a quota of 200,000 yuan, then the remaining available quota after 9:00 on November 11 (i.e., after completing the filing) is 7.3 million yuan.

The significance of handling it this way is, first, it can prevent false invoicing; if there is no filing, the invoicing quota is directly controlled; second, it encourages, or one might say forces, taxpayers to file in advance. If there is no invoicing requirement, they can wait until the last day to file; if there is an invoicing requirement and the balance is insufficient, they must file in advance.

Source: internet

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