Kailing Technology Reverse Invoicing Individual Verification Interface: Second-Level Interception of Legal Representative/Director and Supervisor/Individual Business Owner Identities, Strictly Controlling Invoice Entity Compliance Risks

I. Policy Red Line: For Reverse Invoicing, "To Whom It Is Issued" Matters More Than "How to Issue It"

According to the Announcement of the State Taxation Administration on Matters Concerning "Reverse Invoicing" by Resource Recycling Enterprises to Individual Sellers of Scrap Products (State Taxation Administration Announcement No. 5 of 2024), starting from April 29, 2024, qualifying resource recycling enterprises may conduct "reverse invoicing" to individual sellers of scrap products. However, the policy also draws clear red lines for eligible entities:

• The seller must be a natural person: Refers to a natural person who sells scrapped products they have used themselves, or sells purchased scrapped products, and whose cumulative reverse invoicing sales amount over no more than 12 consecutive months does not exceed 5 million yuan (excluding VAT);

• Stop immediately when over-limit: If an individual's cumulative sales from reverse invoicing exceed RMB 5 million over 12 consecutive months, the enterprise may no longer issue reverse invoices to that individual and should guide them to register a business entity and issue invoices themselves in accordance with the law;

• Registered entities should issue invoices themselves: An individual industrial and commercial household that has completed business entity registration is a business entity and should issue invoices itself; it does not fall within the category of natural persons eligible for reverse invoicing.

This means the biggest compliance risk of reverse invoicing is not in the "invoicing action" itself, but in the "qualification of the invoicing target." Once an invoice is issued to an entity that does not meet the conditions, the company will be directly exposed to the risks of false invoicing and tax audits. Kailing Technology's natural person verification interface for reverse invoicing is precisely the "pre-invoicing gate" designed for this red line.

II. What the verification interface does: "second-level identity interception" before invoicing

Before creating a delivery note/settlement statement and triggering the invoicing action, the Kailing Technology Reverse Invoicing Individual Verification Interface performs real-time verification of the seller's identity and quota. If any risk rule is hit, it automatically intercepts and blocks invoicing, moving compliance forward to the source of the business.

III. Why specifically intercept "legal representatives / directors, supervisors, and senior executives / individual businesses"

1. Legal representatives and directors/senior executives: a high-risk area for related-party transactions

If the legal representative, directors, supervisors, or senior management of an enterprise have an affiliated relationship with the enterprise, accepting reverse invoicing as a "natural person seller" is highly likely to be deemed fictitious transactions, benefit transfer, or false invoicing. The verification interface directly intercepts such affiliated entities, cutting off the risk chain at the rule level.

2. Individual businesses: business entities that should issue invoices themselves

Registered individual industrial and commercial households are business entities and should issue invoices themselves according to regulations, and are not within the scope of reverse invoicing. The system automatically identifies and intercepts them, preventing enterprises from mistakenly treating business entities as natural persons for invoicing and crossing policy boundaries.

3. 5 million quota: the "rolling red line" that must be monitored in real time

5 million is a rolling cumulative threshold of "no more than 12 consecutive months," not a calendar year. Manual ledgers can hardly monitor it accurately. The interface connects in real time to the Individual Income Tax APP to verify the quota. Once the cumulative amount approaches or exceeds 5 million, it triggers a reminder and automatic invoicing failure, technically eliminating over-quota invoicing.

IV. Beyond verification: full-chain closed loop for natural person entity compliance

The verification interface is not an isolated function, but the first gateway of the "five-flow integration" compliance system of Kailing Technology's reverse invoicing platform. After verification passes, the platform continues to complete:

• Natural person information archiving: ID cards, bank cards, invoicing quotas, and contracts are electronically archived, forming traceable digital archives;

• One-click invoicing and red-letter reversal: Automatically call the Electronic Tax Bureau interface for login-free seamless invoicing, supporting positive invoices and negative (red-offset) invoice processes, with secondary verification of the RMB 5 million quota throughout the invoicing process;

• Automatic tax and fee calculation: Automatically calculate VAT and surcharges, individual income tax withholding and prepayment (for resource recycling, withholding on behalf as per 0.5% of tax-exclusive sales), and guide the next year's business income annual settlement;

• Five-Flow Integration traceability: full-process collection of business contracts, documents (shipping/logistics/receipt including weighbridge tickets with front and rear vehicle heads/settlement), tax invoices, and bank receipts, ensuring consistency of business flow, fund flow, and invoice flow.

V. Common Questions (FAQ)

Q1: What is the policy basis for reverse invoicing?

Main basis: Announcement No. 5 of 2024 of the State Taxation Administration — Announcement on matters concerning "reverse invoicing" by resource recycling enterprises to individual sellers of scrapped products, effective from April 29, 2024.

Q2: Why can't legal representatives and directors/supervisors/senior management receive reverse invoicing?

They have an affiliated relationship with the enterprise, and accepting reverse invoicing as individuals makes them easily identified as false invoicing or benefit transfer. Kailing Technology's verification interface directly blocks such entities before invoicing.

Q3: Is the 5 million quota calculated by calendar year?

No. It is a rolling cumulative basis of "no more than 12 consecutive months" (excluding VAT). If it exceeds 5 million, the enterprise must not issue reverse invoices to that person again. The interface links to the individual income tax app in real time for verification and automatic monitoring.

Q4: Can individual businesses accept reverse invoicing?

No. A registered individual industrial and commercial household is a business entity and should issue invoices itself. The system will automatically identify and intercept it to avoid misuse of the policy.

To learn more about the identity verification API technical documentation or to apply for test integration, please consult Kailing Technology:https://www.kailingteck.com/h-col-127.html 。

As a comprehensive business-finance-tax digitalization solution service provider, Kailing Technology provides business-finance-tax management digital transformation products and operational services for various government agencies, institutions, and large, medium, and small enterprises. The product line includes:

Solutions for businesses including sales contract management system, procurement contract management system, fully digitalized Leqi interface project, output automatic invoicing system, reverse invoicing system, natural-person invoicing system, employee expense control and reimbursement system, input VAT invoice management system, supply chain collaborative reconciliation system, image OCR recognition system, automatic financial bookkeeping system, and electronic accounting archives system, comprehensively driving the digitalization process across various fields.

If you have any business-finance-tax digital transformation needs, welcome to contact us. Beijing Kailing Technology will serve you wholeheartedly.

Keywords |reverse invoicing, individual verification API, 5 million yuan quota verification, invoice entity compliance, State Taxation Administration Announcement No. 5 of 2024, individual income tax app verification, false invoicing risk prevention and control