Questions to Understand in Advance About Fully Digitalized Leqi Direct Connection Service

01 What is Leqi?

Leqi is a fully digitalized e-invoice service direct connection platform for which the tax bureau provides interfaces free of charge to the public.

[Interpretation of the Guidelines on Leqi Self-use Direct Connection Services] Leqi (Natural System) refers to the platform through which the State Taxation Administration provides eligible enterprises, by means of direct connection between the tax system and the enterprise's own information system, with tax-related services such as fully digitalized e-invoices featuring open rules and unified standards (hereinafter referred to as "Leqi services").

02 Does integrating with Leqi require payment?

Integrating with Leqi does not require a separate fee, but the integration process will consume corresponding debugging costs for the integrating party.

[Interpretation of the Guidelines on Leqi Self-use Direct Connection Services] Leqi self-use (Natural System Connection for Self-use, 'NSCS') means that the Leqi services provided by an enterprise's own information system directly connected to Leqi (hereinafter referred to as the "direct connection platform") are only applicable to the unit itself and its subordinate units, and do not mainly aim to obtain economic benefits. Subordinate units include group enterprise member units, equity-controlled units, and others.

03 Direct Connection to Leqi requires compliance withWhichwhat conditions?

Direct Connection to Leqi is subject to conditional restrictions, mainly related to enterprise scale and enterprise invoicing volume.A single entity that meets the conditions may connect directly; a group enterprise that meets the conditions may connect directly as a group, with the group serving as the primary responsible entity and subordinate entities serving as user entities.

Note that group subsidiaries and branches as user units directly connecting to Leqi may have their tax credit rating relaxed to M level(B and M-level taxpayers need to regularly provide relevant data on goods flow, capital flow, and cash flow; except for non-independent accounting branches that may not participate in tax credit rating evaluation)。

·Basic Conditions

1. First is the scope of pilot taxpayers for fully digitalized e-invoice issuance;

2. Tax credit rating is Grade A or B;

3. The enterprise's total operating revenue in the previous year exceeds 50 million yuan;

4. The total cumulative invoice issuance and receipt volume in the previous year is no less than 50,000, or the cumulative invoice issuance and receipt volume is less than 50,000 but the invoiced amount is no less than RMB 500 million;

5. No major tax violations determined by tax authorities in the past three years;

6. Be able to provide relevant tax-related data in accordance with the law and the requirements of tax authorities, including but not limited to the identity information of the user entity, remuneration account information, operating income status, etc., as well as other tax-related data that need to be specially provided, such as goods flow, capital flow, and cash flow;

7. For taxpayers in industries related to people's livelihood such as hospitals, thermal power and public transportation, whose operating revenue and invoice issuance/receipt volume do not meet the above conditions, tax authorities may appropriately lower the access condition standards according to actual circumstances.

·Technical Conditions

1. Comply with network security and data security regulations, follow the relevant management requirements of tax authorities, truthfully report major changes and user entity situations to tax authorities, and bear joint liability for serious consequences caused by illegal or non-compliant acts of user entities;

2. Possess professional informatization construction, service, and operation and maintenance capabilities; the enterprise's own information system has software copyrights, usage rights, or relevant authorization;

3. Data must be stored in accordance with the requirements of tax authorities with embedded risk control rules, and interfaces must be opened to tax authorities for online verification.

04 If a company meets the conditions for Leqi Direct Connection, must it build it itself?

No. A company may also authorize its affiliated enterprises to build and manage the platform, or authorize a third-party enterprise with no affiliation to build the platform.

05 What materials does a company need to prepare to connect to Leqi?

1. Leqi Direct Connection Service Access Information Form;

2. Leqi Direct Connection Service Agreement;

3. Software copyright or usage right certificate for the enterprise's own information system;

4. "Project Report": should include the business part, technical part, and management part. The business part should at least include the description of the access application development project, project planning, business volume, etc. The technical part should at least include network environment, security plan, hardware environment, system design, technical implementation, etc. The management part should at least include technical support management, security management, operation and maintenance management, etc.;

5. Power of Attorney (provided when the direct connection entity authorizes its affiliated enterprise to build and manage the platform, or authorizes a non-affiliated third-party enterprise to build the platform);

6. "Leqi Service Network Address Filing Form";

7. Following the principle of territorial management, provide corresponding other materials as required by the local tax authorities.

06 What capabilities on the Leqi Platform can be subscribed to?

Leqi Direct Connection works by calling platform capabilities (invoice issuance, invoice verification, checkbox authentication, etc.),Integrate corresponding tax-related business with proprietary business systems to achieve multi-scenario, large-scale, compliant, and automated processing of tax-related business.

After Leqi Direct Connection, platform capabilities are mainly called through capability subscription. Direct connection units can view the activation status and validity period of relevant capabilities through the Leqi platform capability center, and initiate capability subscription requests for capabilities not yet activated. Leqi capability subscription is also gradually improved and refined along with the construction of China Golden Tax Phase IV.

Tax authorities will issue a version upgrade notice when the Leqi platform undergoes a functional upgrade. Directly connected units shall complete system modifications and integration testing within 30 days.

07 Which matters, if changed after Leqi Direct Connection, must be promptly filed with the tax bureau?

1. Relevant units using Leqi for their own use shall report relevant changes to the tax authorities in accordance with the tax authorities' service management requirements.

2. If important registration information such as the identity, contact information, or institutional address of the legal representative, financial officer, or project leader of the directly connected unit or user unit changes, it must be promptly submitted to the competent tax authority through the Leqi platform;

3. If information such as the legal representative of a directly connected unit changes, the directly connected unit must re-sign and submit the Leqi Direct Connection Service Agreement and other relevant agreements;

4. If affiliated relationships such as head office and branches, parent and subsidiary companies, and controlling relationships change, the direct connection unit must report to the competent tax authority within 3 days after the change, etc.

08 Do the platform and capability subscriptions used by Leqi Direct Connection have time limits?

After initial access, the term of use is valid for 2 calendar years,If continued use is needed, an extension request should be initiated 3 months before expiration. If the direct connection unit fails to initiate an extension request within the prescribed period, the tax authority will send a reminder and limit the platform's business processing concurrency; if the extension request is still not submitted upon expiration, the tax authority will terminate its access qualification.

If the owner of Leqi for self-use terminates the provision of tax-related services such as fully digitalized e-invoices to its user entities, it shall, at least 30 days in advance, file the termination of services with the competent tax authority of the direct connection entity.

Beijing Kailing Technology Co., Ltd.——an enterprise business-finance-tax digitalization solution service provider.

Kailing Technology provides solutions for sales management systems, procurement management systems, output invoicing systems, input invoice collection systems, imaging management systems, financial posting systems, electronic accounting archives, fully digitalized e-invoice and Leqi interfaces and other businesses according to enterprise needs, professionally and efficiently helping enterprises transform and upgrade their business-finance-tax digital management.

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