"Leqi Service" is accelerating; how should group enterprises respond?

Recently, the National Tax Work Conference was held in Beijing. The conference noted: continue to deepen tax collection and administration reform, steadily advance the promotion and application of fully digitalized e-invoices, expand the rollout of the nationwide unified new electronic tax bureau, deepen and expand the application of tax big data, and improve digital and intelligent governance efficiency.

Starting December 1, 2023, except for Hong Kong, Macao, and Taiwan, nationwide full coverage of the fully digitalized e-invoice pilot has been achieved. As the pilot continues to deepen, the circulation and application of fully digitalized e-invoices are core issues for enterprises. Group enterprises have many and dispersed tax entities and more complex businesses. It is understood that as of January 16, 2024, all 36 provinces, autonomous regions, and municipalities across the country have issued the Guidelines on the Specifications for Leqi Self-Use Direct Connection Services, attracting attention from many enterprises, especially large group enterprises.What is Leqi? What impact does it have on enterprises? Should you apply for Leqi? What conditions are required?

01 What is "Leqi service"?

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 rules-open, standards-unified tax-related services such as fully digitalized e-invoices.

Leqi for self-use (Natural System Connection for Self-use, 'NSCS') means that the Leqi services provided by the enterprise's own information system directly connected to Leqi (hereinafter referred to as the "direct connection platform") apply only to the entity itself and its subordinate entities, and not primarily for obtaining economic benefits. Subordinate entities include group enterprise member entities, equity-controlled entities, etc.

Since the implementation of "Leqi Services,"Kailing TechnologyActively promote the application of "Leqi" in pilot enterprises, and planned a flexible integrated input-output solution under a group structure based on tax-enterprise direct connection, providing enterprises with comprehensive services covering "Leqi application," supporting multiple business scenarios, and upgrading from "single-entity" to "group-wide."

02 What are the application conditions for "Leqi Service"?

1. Basic Conditions

Enterprises accessing "Leqi Service" must have total operating revenue of more than RMB 50 million in the previous year; the cumulative invoice issuance volume and invoice receipt volume in the 12 months before the month of initiating the access request must be no less than 50,000 invoices, or if the cumulative number of invoices issued and received is less than 50,000, the invoicing amount must be no less than RMB 500 million; there must be no major tax violations determined by tax authorities in the past three years; and they must be able to provide relevant tax-related data in accordance with tax authority requirements. (Requirements vary by region; please consult the local tax bureau for details.)

2. Technical and security conditions

Have professional informatization construction, service, and operation and maintenance capabilities, and open interfaces to the tax authority for online verification by the tax authority.

Special reminder: if a single enterprise using the service does not meet the above requirements, it is sufficient for the directly connected unit or enterprises with mutual equity control relationships within the group enterprise to meet them cumulatively.

03 Why should group enterprises connect to "Leqi Services"?

"China Golden Tax Phase IV" requires enterprises to undergo financial digital transformation and upgrading, and "Leqi" is the best tool! Through direct connection between the tax system and enterprises' own information systems, it provides tax-related services such as digital electronic invoices with open rules and unified standards, helping large enterprises build a secure headquarters-to-headquarters "tax-enterprise direct connection" tax-related data management center, thereby establishing a first-class financial management system and reducing the degree of information asymmetry between tax authorities and enterprises.

I. Reduce costs and increase efficiency

Launch Leqi Direct Connection, drive business with data elements, and use fully digitalized e-invoices to connect the entire business-finance-tax-invoice process for collaborative processing. Direct-connection invoicing, reimbursement, booking, authentication, and other operations meet enterprise needs, reduce costs, require no tax-control equipment, invoice type verification, or invoice collection, shorten workflows, and save labor, media, and shipping costs.

II. Improve data value

The tax authority processes enterprise data through "Leqi" to ensure authenticity, continuity, and accuracy. Based on this trusted data, the tax authority evaluates enterprise credit risk and no longer relies on third-party institutions. Enterprise credit enhancement and financing can be judged through enterprise data, and data becomes a reflection of enterprise value.

III. Tax-enterprise direct connection, risk alerts

"Leqi Service" helps group enterprises build an all-channel, all-invoice-type invoice pool and tax-related data center, realize centralized and automated invoice management, integrate other business systems to achieve business-finance-tax integration, open capabilities such as direct connection filing and risk warnings, and drive tax digital transformation.

It is reported that nearly 100 large and medium-sized group enterprises have successfully launched "Leqi Services," and are actively exploring a centralized and standardized smart business-finance-tax management system through tax-enterprise direct connection tax-related services.

04 What challenges will "Leqi" access bring to enterprises?

For enterprises, accessing the Leqi platform will face considerable challenges in terms of business stability and system upgrade and transformation costs.

1. The logic of the Leqi service interface is relatively complex, requiring considerable time and effort to understand, and the cost involved is high.

2. Independent R&D by enterprises also needs to start from scratch and develop various validation rules according to interfaces. If any link has an abnormality, it may bring immeasurable tax risks.

3. Enterprises must store data in accordance with the requirements of the tax authority and embed risk control rules.

4. Once the tax system is upgraded, enterprises must complete the upgrade synchronously within 30 days; otherwise, normal business operations will be affected.

The Leqi guideline documents provided by the State Taxation Administration are clear and detailed in steps. For enterprises with a high degree of informatization and a strong IT technical team that can meet the needs of continuous operation and upgrading, whether in terms of coordination or cycle control, they have unique advantages, and such enterprises with comprehensive capabilities can choose self-building.

For enterprises with limited informatization, insufficient IT team integration experience and immature business-finance-tax data organization, does that mean they cannot connect to "Leqi"? Of course not. Such enterprises should choose a supplier with professional business-finance-tax informatization technical capabilities, rich experience in group enterprise project implementation, close tracking and understanding of tax policies, and familiarity with the access methods of different business systems, which can quickly provide a package of solutions, reduce the cost of multiple developments, and achieve smooth system upgrades and stable application.

05 Why chooseKailing Technology？

Kailing TechnologyAsProfessional and efficientProvider of enterprise business-finance-tax digitalization solutions, leveraging project service experience with "Leqi Services" for pilot enterprises to bring an overall "fully digitalized e-invoice - Leqi Services" solution to group enterprise customers.

On one hand,Kailing TechnologyEquipped with rich practical experience, able to meet the fully digitalized Leqi upgrade needs of enterprises of different sizes across various industries.

Kailing TechnologyBusiness-Finance-Tax DigitalizationThe solution has been practically applied in numerous industries and leading enterprises, with mature construction capabilities, compatibility capabilities, integration capabilities, and implementation and delivery capabilities, and can provide enterprises with one-on-one consulting and technical support services for fully digitalized Leqi across the entire process and all regions.

On the other hand,Kailing TechnologyFocusing on tax-control invoices, tax filing,Electronic accounting archivesand other fields, with professional business-finance-tax informatization technical capabilities, rich experience in implementing group enterprise projects, and familiarity with the access methods of different business systems, can provide enterprises with convenient access services compatible with the latest Leqi service platform, and can also quickly respond to the latest policy changes and changes brought by Leqi platform upgrades, timely provide product version upgrade and iteration services for enterprises, meet various compliance and risk control requirements, and ultimately achieve business-finance integration and promote enterprise digital transformation.

06 Access process for "Leqi Service"

I. Application steps

II. Application materials

Application materials are basically the same across pilot cities, as follows:

III. Approved

IV. API documentation

If you have "Leqi Service" needs and want to comprehensively and systematically plan your group's business-finance-tax system, you canContact Kailing Technology, and we will arrange for a business-finance-tax digitalization expert toCommunication，Provide you with professional consulting and technical support！

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.