Kailing Technology Reverse Invoicing Individual Verification Interface: Second-Level Identity Verification of Directors and Supervisors/Individual Business Owners, Blocking Entity Compliance Risks Before Invoicing

I. The biggest risk of reverse invoicing: issuing invoices to people who should not receive them

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: Selling scrap products one has used, or selling acquired scrap products, with cumulative reverse invoicing sales not exceeding RMB 5 million over 12 consecutive months (excluding VAT);

• Stop immediately when over-limit: If the cumulative amount exceeds 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: A registered individual industrial and commercial household is a business entity and should issue invoices itself; it is not a natural person eligible for reverse invoicing.

That is to say, if an invoice is issued to an ineligible entity, the enterprise will be directly exposed to the risks of false invoicing and tax audits. Kailing Technology's reverse invoicing individual verification interface is precisely the "pre-invoicing gate" set for this red line.

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

Before creating delivery notes/settlement notes and triggering invoicing actions, the interface performs real-time verification of seller identity and quota. Hitting any risk rule automatically intercepts and blocks invoicing, front-loading compliance to the business source.

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, and 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: the full-chain closed loop of individual entity compliance

The verification interface is the first checkpoint of the "five flows in one" compliance system of the Kailing Technology 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) invoices, 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.

The biggest compliance risk of reverse invoicing is not "how to issue" but "to whom to issue." Kailing Technology's reverse invoicing individual verification interface performs second-level verification of the seller's identity before invoicing, automatically blocking high-risk entities such as the enterprise's own legal representative, directors/supervisors/senior managers, and registered individual industrial and commercial households, plugging invoice entity compliance risks at the source：www.kailingteck.com 。

Kailing TechnologyAs a comprehensive business-finance-tax digitalization solution service provider, we provide 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:

Sales contract management system, procurement contract management system, fully digitalized Leqi interface project, output automatic invoicing system,Reverse invoicing system,Solutions for the invoice issuance for individuals system, employee expense control and reimbursement system, input VAT invoice management system, supply chain collaborative reconciliation system, image AI OCR recognition system, automated financial bookkeeping system, electronic accounting archives system, and other businesses, comprehensively advancing the digitalization process across various fields.

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

Keywords：reverse invoicing, individual verification API, invoice entity compliance, director/supervisor/executive interception, sole proprietorship, State Taxation Administration Announcement No. 5 of 2024, individual income tax app verification, false invoicing risk prevention and control