"Official Document" State Taxation Administration matters concerning "reverse invoicing" and their interpretation

State Taxation Administration

Announcement on Matters Concerning "Reverse Invoicing" by Resource Recycling Enterprises to Individuals Selling Scrap Products

State Taxation Administration Announcement No. 5 of 2024

　　To implement the "Notice of the State Council on Issuing the Action Plan for Promoting Large-Scale Equipment Renewals and Consumer Goods Trade-Ins" (Guo Fa [2024] No. 7), resource recycling enterprises shall implement "reverse invoicing" to individual sellers of scrapped products, and the relevant matters are hereby announced as follows:

　　I. Starting from April 29, 2024, when a seller of scrapped products as a natural person (hereinafter referred to as the seller) sells scrapped products to a resource recycling enterprise, a qualifying resource recycling enterprise may issue an invoice to the seller (hereinafter referred to as "reverse invoicing").

　　Scrap products refer to products that have lost all or part of their original use value and are generated in the process of social production and living consumption.

　　Seller refers to a natural person who sells used scrapped products or sells purchased scrapped products, and whose cumulative sales via reverse invoicing over no more than 12 consecutive months (referring to calendar months, the same below) do not exceed 5 million yuan (excluding VAT, the same below).

　　II. Resource recycling enterprises implementing "reverse invoicing" (including units and individual industrial and commercial households, the same below) shall meet one of the following three conditions and actually engage in resource recycling business:

　　(1) Those engaged in hazardous waste collection shall meet the requirements of the national measures for the administration of hazardous waste operation licenses and obtain a hazardous waste operation license;

　　(2) Those engaged in the recycling of end-of-life motor vehicles shall meet the requirements of the Measures for the Administration of the Recycling of End-of-Life Motor Vehicles issued by the national competent commerce department, and obtain the qualification recognition certificate for end-of-life motor vehicle recycling and dismantling enterprises;

　　(3) Except for hazardous waste and end-of-life motor vehicles, other resource recycling enterprises shall comply with the requirements of the renewable resource recycling management measures issued by the national competent commerce department, register as business entities, and complete the filing of renewable resource recycling operators with the commerce department.

　　III. If an individual's cumulative sales amount from "reverse invoicing" for the sale of scrapped products exceeds RMB 5 million over 12 consecutive months, the resource recycling enterprise shall no longer issue "reverse invoices" to that individual. The resource recycling enterprise shall guide individuals who continuously engage in the sale of scrapped products to register as business entities in accordance with the law and issue invoices themselves as required.

　　IV. A resource recycling enterprise that needs "reverse invoicing" shall submit the "Resource Recycling Enterprise 'Reverse Invoicing' Application Form" (Attachment 1) to the competent tax authority, and provide a hazardous waste operation permit, or a qualification recognition certificate for end-of-life motor vehicle recycling and dismantling enterprises, or a registration certificate for renewable resource recycling operators filed with the commerce department.

　　V. Resource recycling enterprises shall, through the electronic invoice service platform or the VAT invoice management system, issue invoices online to sellers in reverse, marked with the words "scrap product purchase".

　　VI. When resource recycling enterprises conduct "reverse invoicing" and when taxpayers issue invoices themselves for the sale of scrapped products, they shall correctly select the "scrapped products" category code (Appendix 2) in accordance with the new "Commodity and Service Tax Classification Coding Table". The State Taxation Administration will optimize and adjust the "Commodity and Service Tax Classification Coding Table" as needed and update it in the invoicing system in a timely manner.

　　VII. Resource recycling enterprises may, based on the actual business needs of reverse invoicing, apply to the competent tax authority in accordance with regulations to adjust the invoice quota, or the maximum invoicing limit and number of invoices.

　　Eight, if a resource recycling enterprise selling scrapped products applies the simplified VAT calculation method, it may issue general invoices in reverse and may not issue special VAT invoices in reverse; if it applies the general VAT calculation method, it may issue both special VAT invoices and general invoices in reverse. If the VAT calculation method changes for a resource recycling enterprise selling scrapped products, it shall apply to adjust the invoice type for "reverse invoicing."

　　Resource recycling enterprises may deduct the tax amount noted on special VAT invoices issued in reverse according to regulations.

　　IX. If a general VAT taxpayer among resource recycling enterprises selling scrapped products had chosen to apply the VAT simplified taxation method in accordance with relevant provisions before this announcement took effect, it may change to the general VAT taxation method before July 31, 2024.

　　Except for the above situations, after a resource recycling enterprise chooses the VAT simplified taxation method to calculate and pay VAT, it may not change within 36 months; after changing to the VAT general taxation method, it may not choose the VAT simplified taxation method again within 36 months.

　　10. After a resource recycling enterprise implements "reverse invoicing," if circumstances such as sales returns, incorrect invoicing, or sales discounts occur and a red-letter invoice needs to be issued, the resource recycling enterprise shall fill out the "Information Form for Issuing Red-Letter Special VAT Invoices" or the "Red-Letter Invoice Information Confirmation Form." When filling out the "Information Form for Issuing Red-Letter Special VAT Invoices" or the "Red-Letter Invoice Information Confirmation Form," the corresponding blue-letter invoice information shall be filled in, and the red-letter invoice must correspond one-to-one with the original blue-letter invoice.

　　11. When a resource recycling enterprise issues a "reverse invoice" to a seller, it shall, in accordance with regulations, handle the declaration matters for VAT and surtaxes and individual income tax on behalf of the seller, submit the "Tax Payment on Behalf Report Form" (Attachment 3) and the "Tax Payment on Behalf Detailed Report Form" (Attachment 4) to the competent tax authority within the declaration period of the following month, and pay the taxes and fees paid on behalf of others in accordance with regulations. If the taxes and fees paid on behalf of others are not paid within the prescribed time limit, the competent tax authority shall suspend its "reverse invoicing" qualification and recover the unpaid or underpaid taxes and fees and late fees in accordance with regulations.

　　12. When a resource recycling enterprise issues a "reverse invoice" to a seller for the first time, it shall obtain the seller's consent for the "reverse invoicing" and tax payment on behalf of others matters and retain relevant supporting materials. If the seller does not consent, the resource recycling enterprise may not issue a "reverse invoice" to it, and the seller may apply to the tax authority for invoice issuance on its behalf.

　　13. Sellers who sell scrapped products through "reverse invoicing" may, in accordance with regulations, enjoy preferential tax policies such as exemption from VAT for small-scale taxpayers with monthly sales of less than 100,000 yuan and payment of VAT at a reduced rate of 1% instead of the 3% levy rate. If the relevant tax and fee preferential policies for small-scale taxpayers are subsequently adjusted, the adjusted policies shall apply.

　　If the seller's monthly sales of scrapped products via reverse invoicing exceed 100,000 yuan, the resource recycling enterprise that issued the reverse invoice shall, based on the respective reverse invoicing amounts for the month, handle VAT and surcharge filing on behalf of the seller and pay the taxes handled on behalf as required.

　　14. Where a seller sells scrapped products through "reverse invoicing", individual income tax on business income shall be prepaid at 0.5% of the sales amount.

　　The seller shall, before March 31 of the year following the reverse invoicing, file the annual settlement of business income with the competent tax authority at the place of business operation on their own, and the resource recycling enterprise shall provide the seller with information such as the reverse invoicing and taxes paid.

　　If tax authorities discover that a seller has failed to handle the annual final settlement of business income as required, they shall take recovery measures in accordance with the law and require the resource recycling enterprise to stop "reverse invoicing" to that seller.

　　15. When a resource recycling enterprise engages in comprehensive resource utilization projects listed in the Catalogue of VAT Preferences for Comprehensive Resource Utilization Products and Labor Services (2022 Edition), the invoices it issues in reverse belong to the "Announcement by the Ministry of Finance and State Taxation Administration on Improving the VAT Policy for Comprehensive Resource Utilization" (No. 40 of 2021), Article 3, Item 2, Point 1, the "VAT invoice obtained from the seller."

　　16. Invoices issued in reverse by resource recycling enterprises that comply with the relevant provisions of tax laws, administrative regulations, rules and normative documents may serve as pre-tax deduction vouchers for the enterprise income tax of the enterprise. Where pre-tax deduction is made in violation of the provisions, it shall be handled in accordance with the relevant provisions of the Law of the People's Republic of China on the Administration of Tax Collection, the Measures of the People's Republic of China for the Administration of Invoices, and other relevant provisions.

　　17. Resource recycling enterprises implementing "reverse invoicing" shall, in accordance with the relevant provisions of the Law of the People's Republic of China on the Administration of Tax Collection and its implementation rules, preserve materials that can prove the authenticity of the business, including purchase contracts or agreements for purchasing scrapped products, transportation invoices or vouchers, cargo weighbridge tickets, transfer payment records, etc., and establish purchase ledgers to record in detail the time, place, seller and contact information, name, quantity, price, etc. of each purchase business for inspection. If the taxpayer's existing account books and systems can include the above content, there is no need to establish a separate ledger.

　　18. Resource recycling enterprises shall be responsible for the authenticity of the relevant materials submitted when handling "reverse invoicing" business and the resource recycling business, and shall perform tax obligations in accordance with law. Once it is discovered that a resource recycling enterprise submits false materials to fraudulently obtain the "reverse invoicing" qualification or that the resource recycling business is false, the tax authority shall cancel its "reverse invoicing" qualification and pursue liability in accordance with law.

　　19. Tax authorities will continue to optimize tax services and use new information technology means to continuously improve the convenience of "reverse invoicing" and tax payment on behalf of others for resource recycling enterprises.

　　Hereby announced.

Attachment:

1."Reverse Invoicing" Application Form for Resource Recycling Enterprises

2."Scrapped products" category code

3. Tax Fee Agency Report Form

4. Tax Fee Agency Detail Report Form

State Taxation Administration

April 24, 2024

Interpretation

Interpretation of the Announcement of the State Taxation Administration on Matters Concerning "Reverse Invoicing" by Resource Recycling Enterprises to Individuals Selling Scrap Products

　　To implement the requirements of the Notice of the State Council on Issuing the Action Plan for Promoting Large-Scale Equipment Renewal and Consumer Goods Trade-In (Guo Fa [2024] No. 7), implementing "reverse invoicing" by resource recycling enterprises to individual sellers of scrapped products, on April 25, the State Taxation Administration issued the Announcement of the State Taxation Administration on Matters Concerning "Reverse Invoicing" by Resource Recycling Enterprises to Individual Sellers of Scrapped Products (No. 5 of 2024, hereinafter referred to as Announcement No. 5). The interpretation is as follows:

I. Who are included as individual sellers of scrapped products? Are individuals who purchase scrapped products and then resell them included?

　　Answer: According to current invoice management system regulations, general VAT taxpayers and small-scale taxpayers selling scrapped products may issue invoices themselves; natural persons selling scrapped products (including selling scrapped products they have used themselves, or selling scrapped products they have purchased) may apply to the tax authority for invoice issuance on their behalf. Compliant invoicing and invoice receipt in the circulation of scrapped products has already been achieved. Announcement No. 5 implements the decisions and arrangements of the Party Central Committee and the State Council, and implements "reverse invoicing" by resource recycling enterprises to natural person sellers of scrapped products, in order to further enhance the convenience for resource recycling enterprises to obtain invoices when purchasing scrapped products from natural persons.

　　The natural person seller of scrapped products referred to in Announcement No. 5 (hereinafter referred to as the seller) includes both natural persons selling scrapped products they have used themselves and natural persons selling scrapped products they have purchased. In addition, the natural person shall meet the condition that the cumulative sales amount of "reverse invoicing" for no more than 12 consecutive months does not exceed 5 million yuan. The cumulative sales amount of "reverse invoicing" here includes the sales amount of "reverse invoicing" by multiple resource recycling enterprises to the same natural person.

　　To regulate market and tax order, Announcement No. 5 also provides that where an individual's cumulative sales amount of scrapped products under "reverse invoicing" exceeds 5 million yuan over 12 consecutive months, the resource recycling enterprise may no longer issue "reverse invoices" to them. Resource recycling enterprises shall guide individuals continuously engaged in the business of selling scrapped products to register as business entities in accordance with the law and issue invoices themselves in accordance with regulations.

　　Illustration:

　　Scenario 1:Resource recycling enterprise Company A has obtained the "reverse invoicing" qualification. From July to October 2024, all waste paper purchased by individual Jia was sold to Company A, once per month, with tax-exclusive sales amounts of 2 million yuan, 2 million yuan, 1 million yuan, and 2 million yuan respectively. Apart from this, individual Jia had no other business of selling end-of-life products. From July to September 2024, individual Jia's cumulative sales amount of end-of-life products was 5 million yuan, meeting the relevant conditions of Announcement No. 5, and Company A could issue a "reverse invoice" to individual Jia. However, in October 2024, when individual Jia again sold waste paper to Company A, because its cumulative sales amount of end-of-life products over no more than 12 consecutive months exceeded 5 million yuan, it no longer met the relevant provisions of Announcement No. 5, and Company A could no longer issue a "reverse invoice" to individual Jia. At the same time, individual Jia may register as a business entity according to law and issue invoices itself according to regulations.

　　Scenario 2:Resource recycling enterprises Company A and Company C have both obtained the "reverse invoicing" qualification. In August 2024, individual Jia sold waste paper to resource recycling enterprise Company A, with a tax-exclusive sales amount of 2.8 million yuan, and Company A issued a "reverse invoice" to individual Jia; in September 2024, individual Jia sold waste paper to resource recycling enterprise Company B, with a tax-exclusive sales amount of 500,000 yuan. Because Company B did not meet the "reverse invoicing" conditions and had not obtained the "reverse invoicing" qualification, it did not issue a "reverse invoice" to individual Jia, and individual Jia applied to the tax authority for invoice issuance; in October 2024, individual Jia sold waste paper to Company C, with a tax-exclusive sales amount of 2 million yuan. Apart from this, individual Jia had no other business of selling end-of-life products. In October 2024, when individual Jia sold waste paper to Company C, because the cumulative sales amount of end-of-life products in its "reverse invoicing" business over no more than 12 consecutive months had not reached 5 million yuan (2.8 + 2 = 4.8 million yuan), Company C could issue a "reverse invoice" to individual Jia when purchasing waste paper from individual Jia.

II. What conditions should resource recycling enterprises implementing "reverse invoicing" meet?

　　Answer: Resource recycling enterprises implementing "reverse invoicing" shall meet one of the following three conditions and actually engage in resource recycling business:

　　(1) Those engaged in hazardous waste collection shall meet the requirements of the national measures for the administration of hazardous waste operation licenses and obtain a hazardous waste operation license;

　　(2) Those engaged in the recycling of end-of-life motor vehicles shall meet the requirements of the Measures for the Administration of the Recycling of End-of-Life Motor Vehicles issued by the national competent commerce department, and obtain the qualification recognition certificate for end-of-life motor vehicle recycling and dismantling enterprises;

　　(3) Except for hazardous waste and end-of-life motor vehicles, other resource recycling enterprises shall comply with the requirements of the renewable resource recycling management measures issued by the national competent commerce department, register as business entities, and complete the filing of renewable resource recycling operators with the commerce department.

　　In addition, resource recycling enterprises that implement "reverse invoicing" include entities and individual industrial and commercial households. That is, individual industrial and commercial households engaged in resource recycling business that meet the above conditions can also apply for "reverse invoicing."

III. How should eligible resource recycling enterprises apply for "reverse invoicing"?

　　Answer: If a resource recycling enterprise needs "reverse invoicing", it shall submit the <Resource Recycling Enterprise "Reverse Invoicing" Application Form> to the competent tax authority. The application form contents include: the "reverse invoicing" application time, the category of scrapped products recycled, and the applicable VAT calculation method for selling scrapped products, etc. At the same time, it shall provide a hazardous waste business license or a qualification recognition certificate for scrapped motor vehicle recycling and dismantling enterprises or a registration certificate for renewable resource recycling operators from the commerce department.

IV. What is the scope of application of the "scrapped products" category code?

　　Answer: To promote "reverse invoicing" for resource recycling enterprises, the State Taxation Administration updated the Commodity and Service Tax Classification Code Table, adding a "scrapped products" category code, under which there are ten categories of scrapped product codes (specifically including scrap steel, scrap nonferrous metals, scrap plastics, scrap tires, scrap paper, waste electrical and electronic products, scrapped motor vehicles, waste textiles, scrap glass, and waste batteries) as well as an "other scrapped products" category code. When resource recycling enterprises conduct "reverse invoicing," and when taxpayers issue invoices themselves for the sale of scrapped products, they shall select the correct code under the "scrapped products" category code. If the scrapped products sold do not belong to the above ten categories of scrapped products, the corresponding code shall be selected under the "other scrapped products" category code, and the specific product name of the scrapped product must also be filled in.

　　The State Taxation Administration will, as needed, optimize and adjust the "Table of Tax Classification Codes for Goods and Services" in due course and update it promptly in the invoicing system; for important adjustments, it will publish them in due course.

V. What invoices can resource recycling enterprises implementing "reverse invoicing" issue?

　　Answer: Considering the actual situation that taxpayers need invoices for pre-tax deduction of income tax, and taxpayers applying the general VAT calculation method also need special VAT invoices to deduct input VAT, therefore, if a resource recycling enterprise is a general VAT taxpayer applying the general VAT calculation method, it may issue special VAT invoices and ordinary invoices in reverse; if it is a small-scale VAT taxpayer, or a general VAT taxpayer that has chosen to apply the simplified VAT calculation method, it may issue ordinary invoices in reverse and may not issue special VAT invoices in reverse. If a resource recycling enterprise selling scrapped products changes its VAT calculation method, it shall apply to adjust the invoice type for "reverse invoicing" and correctly issue invoices according to the selected applicable VAT calculation method. Resource recycling enterprises may deduct the tax amount indicated on special VAT invoices issued in reverse according to regulations.

　　Scenario 1:Resource recycling enterprise Company A is a general VAT taxpayer, chooses to apply the general VAT calculation method for sales of end-of-life products, and has obtained the "reverse invoicing" qualification. In June 2024, Company A purchased waste plastics from individual Jia, who sells end-of-life products, with a purchase amount of 2.02 million yuan. For the above purchase business, Company A chose to issue a special VAT invoice in reverse, noting a tax-exclusive sales amount of 2 million yuan and tax of 20,000 yuan. Then, when calculating the VAT payable for the period to which June 2024 belongs, Company A may deduct the above input tax of 20,000 yuan according to regulations.

　　Scenario 2:Resource recycling enterprise Company A is a general VAT taxpayer, chooses to apply the simplified VAT calculation method for sales of end-of-life products, and has obtained the "reverse invoicing" qualification. In July 2024, Company A purchased waste plastics from individual Jia, who sells end-of-life products, with a purchase amount of 1.01 million yuan. For the above purchase business, because Company A has chosen to apply the simplified VAT calculation method, it may only issue a general invoice in reverse to individual Jia and may not issue a special VAT invoice in reverse.

　　VI. Can a general VAT taxpayer among resource recycling enterprises change its VAT calculation method after choosing to apply the simplified VAT calculation method?

　　Answer: If a general VAT taxpayer among resource recycling enterprises selling scrapped products had chosen to apply the simplified VAT calculation method according to relevant regulations before Announcement No. 5 took effect, it may change to the general VAT calculation method before July 31, 2024. Except for the above circumstance, after a resource recycling enterprise chooses the simplified VAT calculation method to calculate and pay VAT, it may not change within 36 months; after changing to the general VAT calculation method, it may not choose the simplified VAT calculation method again within 36 months.

　　Illustration:

　　Scenario 1:Resource recycling enterprise Company A is a general VAT taxpayer. Since January 2023, it has chosen to apply the simplified VAT calculation method for its business of selling end-of-life products, and obtained the "reverse invoicing" qualification on April 30, 2024. Based on actual operating conditions, Company A changed to the general VAT calculation method starting July 1, 2024. Thereafter, if Company A needs to choose the simplified VAT calculation method again, it must do so only after the general VAT calculation method has been applied for a full 36 months, i.e., after June 30, 2027 (July 1, 2024 to June 30, 2027, totaling 36 months), before it may re-choose the simplified VAT calculation method.

　　Scenario 2:Resource recycling enterprise Company A is a general VAT taxpayer. Since January 2023, it has chosen to apply the simplified VAT calculation method for its business of selling end-of-life products, and obtained the "reverse invoicing" qualification on April 30, 2024. If Company A does not change to the general VAT calculation method before July 31, 2024, but continues to apply the simplified VAT calculation method, it must do so only after the simplified VAT calculation method has been applied for a full 36 months, i.e., after December 31, 2025 (January 1, 2023 to December 31, 2025, totaling 36 months), before it may choose the general VAT calculation method.

Seven, After a resource recycling enterprise issues a "reverse invoice," how should a red-letter invoice be handled if needed?

　　Answer: After a resource recycling enterprise performs "reverse invoicing", if there are circumstances such as sales returns, incorrect invoicing, and sales discounts, and it needs to issue a red-letter special VAT invoice through the VAT invoice management system, the resource recycling enterprise shall fill out the <Information Form for Issuing Red-Letter Special VAT Invoices>; if it needs to issue a red-letter special VAT invoice or ordinary invoice through the electronic invoice service platform, the resource recycling enterprise shall fill out the <Red-Letter Invoice Information Confirmation Form>. When filling out the <Information Form for Issuing Red-Letter Special VAT Invoices> or the <Red-Letter Invoice Information Confirmation Form>, the resource recycling enterprise shall fill in the corresponding blue-letter invoice information, and the red-letter invoice must correspond one-to-one with the original blue-letter invoice.

Eight, What VAT preferential policies can sellers enjoy when selling scrapped products via reverse invoicing?

　　Answer: Sellers who sell scrapped products through "reverse invoicing" may, as required, enjoy preferential tax policies such as VAT exemption for small-scale taxpayers with monthly sales of less than 100,000 yuan and VAT calculated and paid at a reduced rate of 1% instead of the 3% levy rate. If the relevant tax preferential policies for small-scale taxpayers are subsequently adjusted, the adjusted policies shall apply.

　　It should be noted that the seller should use the cumulative monthly sales amount of scrapped products sold through "reverse invoicing" as the basis for determining whether the above VAT preferential policies apply, which may involve sales amounts for which multiple resource recycling enterprises issue "reverse invoices" to them.

　　Illustration:

　　Scenario 1:In May 2024, individual A sold scrap metal to resource recycling enterprise Company A, with a tax-exclusive sales amount of 30,000 yuan; sold scrap metal to resource recycling enterprise Company B, with a tax-exclusive sales amount of 40,000 yuan; and sold scrap metal to resource recycling enterprise Company C, with a tax-exclusive sales amount of 20,000 yuan. All the above resource recycling enterprises had obtained the "reverse invoicing" qualification and issued ordinary invoices to individual A under reverse invoicing. The individual's total monthly sales amount of scrap products through "reverse invoicing" in May 2024 was 90,000 yuan, not exceeding the threshold of 100,000 yuan in monthly sales, so the small-scale taxpayer VAT exemption policy applies. Companies A, B, and C only need to file VAT and surtax declarations on behalf of individual A, without paying VAT and surtaxes.

　　Scenario 2:In May 2024, individual A sold scrap metal to resource recycling enterprise Company A, with a tax-exclusive sales amount of 30,000 yuan; sold scrap metal to resource recycling enterprise Company B, with a tax-exclusive sales amount of 40,000 yuan; and sold scrap metal to resource recycling enterprise Company C, with a tax-exclusive sales amount of 50,000 yuan. All the above resource recycling enterprises had obtained the "reverse invoicing" qualification and issued ordinary invoices to individual A under reverse invoicing. The individual's total monthly sales amount of scrap products through "reverse invoicing" in May 2024 was 120,000 yuan, exceeding the threshold of 100,000 yuan in monthly sales, so the small-scale taxpayer VAT exemption policy does not apply. However, individual A's scrap metal sales may still apply the small-scale taxpayer policy of calculating and paying VAT at a reduced rate of 1% instead of the 3% levy rate. Since Companies A, B, and C all issued "reverse invoices" to individual A, they need to file VAT and surtax declarations on behalf of individual A based on their own "reverse invoicing" amounts, and pay the taxes and fees on behalf of the individual as required. Company A needs to file and pay VAT on behalf of the individual of 30,000 yuan × 1% = 300 yuan, Company B needs to file and pay VAT on behalf of the individual of 40,000 yuan × 1% = 400 yuan, and Company C needs to file and pay VAT on behalf of the individual of 50,000 yuan × 1% = 500 yuan. Surtaxes shall be filed and paid on behalf of the individual in accordance with current regulations.

　　Scenario 3:Resource recycling enterprises Company A and Company B have both obtained the "reverse invoicing" qualification. In May 2024, individual Jia sold scrap metal to resource recycling enterprise Company A, with a tax-exclusive sales amount of 30,000 yuan, and Company A issued a general invoice in reverse. Individual Jia sold scrap metal to resource recycling enterprise Company B, with a tax-exclusive sales amount of 40,000 yuan. Because Company B is a general VAT taxpayer and chose to apply the general VAT calculation method, after mutual negotiation, Company B issued a special VAT invoice with a levy rate of 1% in reverse. In May 2024, individual Jia's total monthly sales of end-of-life products through "reverse invoicing" amounted to 70,000 yuan, not exceeding the 100,000 yuan monthly sales threshold, meeting the conditions for the small-scale taxpayer VAT exemption policy. Because individual Jia's business of selling scrap metal to Company B chose to waive the exemption policy, VAT should be calculated and paid based on the amount and levy rate stated in the special VAT invoice issued in reverse by Company B, with Company B handling VAT and surcharge tax filing on behalf of individual Jia and paying the agency taxes and fees as required; other businesses can still enjoy the exemption policy. In summary, Company A only needs to handle VAT and surcharge filing on behalf of individual Jia, without paying VAT and surcharges; Company B needs to handle filing on behalf and pay VAT of 40,000 yuan × 1% = 400 yuan, with surcharges filed and paid on behalf according to current regulations.

　　Scenario 4:Resource recycling enterprises Company A and Company B have both obtained the "reverse invoicing" qualification. In May 2024, individual Jia sold scrap metal to resource recycling enterprise Company A, with a tax-exclusive sales amount of 80,000 yuan, and Company A issued a general invoice in reverse. Individual Jia sold scrap metal to resource recycling enterprise Company B, with a tax-exclusive sales amount of 40,000 yuan. Because Company B is a general VAT taxpayer and chose to apply the general VAT calculation method, after mutual negotiation, Company B issued a special VAT invoice with a levy rate of 3% in reverse. In May 2024, individual Jia's total monthly sales of end-of-life products through "reverse invoicing" amounted to 120,000 yuan, exceeding the 100,000 yuan monthly sales threshold, so the small-scale taxpayer VAT exemption policy does not apply. Because both Company A and Company B issued "reverse invoices" to individual Jia, each must handle VAT and surcharge tax filing on behalf of individual Jia based on its own "reverse invoicing" amount and pay the agency taxes and fees as required. At the same time, for individual Jia's business of selling scrap metal to Company B, individual Jia chose to waive the policy of calculating and paying VAT at the reduced rate of 1% instead of the small-scale taxpayer 3% levy rate, and VAT should be calculated and paid based on the amount and levy rate stated in the special VAT invoice issued in reverse by Company B. In summary, Company A needs to handle filing on behalf and pay VAT of 80,000 yuan × 1% = 800 yuan, and Company B needs to handle filing on behalf and pay VAT of 40,000 yuan × 3% = 1,200 yuan, with surcharges filed and paid on behalf according to current regulations.

IX. When a resource recycling enterprise issues a "reverse invoice," how should it handle the individual income tax on business income of the seller on their behalf?

　　Answer: The seller prepays individual income tax on business income at 0.5% of the sales amount (excluding VAT), and the resource recycling enterprise handles the filing matters and pays the taxes on behalf as required when performing "reverse invoicing".

10. How should resource recycling enterprises implementing "reverse invoicing" handle agency filing matters and pay agency taxes and fees?

　　Answer: Resource recycling enterprises implementing "reverse invoicing" shall, within the filing period of the month following the "reverse invoicing" and in accordance with regulations, submit the "Tax Payment on Behalf Report Form" and the "Tax Payment on Behalf Detailed Report Form" to the competent tax authority at the enterprise's location, and pay the VAT and surcharges and individual income tax paid on behalf.

11. How should the seller file the annual individual income tax settlement for business income on their own?

　　Answer: The seller needs to complete the annual reconciliation of business income with the competent tax authority at the place of business operation before March 31 of the following year. If the seller has not invested in an individual industrial and commercial household, a sole proprietorship enterprise, or a partnership enterprise, the place of habitual residence shall be the place of business operation. If the seller has also invested in an individual industrial and commercial household, a sole proprietorship enterprise, or a partnership enterprise, after completing the annual reconciliation of business income with the competent tax authorities at the place of habitual residence and the place where the invested enterprise is located respectively, the seller shall choose to file the annual consolidated business income return with the competent tax authority at the place where one of the invested entities is located.

　　12. Can resource recycling enterprises implementing "reverse invoicing" enjoy, in accordance with regulations, the VAT immediate refund policy for comprehensive resource utilization products and labor services on the sales amount corresponding to the "reverse invoicing" portion?

　　Answer: If a resource recycling enterprise engages in resource comprehensive utilization projects listed in the Catalogue of VAT Preferences for Resource Comprehensive Utilization Products and Labor Services (2022 Edition), the invoices it issues in reverse fall under "obtaining VAT invoices from the seller" as stated in Article 3, Item 2, Point 1 of the Announcement of the Ministry of Finance and the State Taxation Administration on Improving the VAT Policy for Resource Comprehensive Utilization (No. 40 of 2021). Therefore, the sales amount corresponding to the "reverse invoicing" portion may enjoy the VAT immediate refund upon collection policy for resource comprehensive utilization products and labor services according to regulations.

　　Illustration:

　　Resource recycling enterprise Company A is a general VAT taxpayer, whose business scope is purchasing scrap steel for producing steelmaking furnace charges. Its production process meets the technical standards and relevant conditions stipulated in the Catalogue of VAT Preferences for Resource Comprehensive Utilization Products and Labor Services (2022 Edition), and it has obtained the "reverse invoicing" qualification. In June 2024, Company A's tax-exclusive sales amount of steelmaking furnace charges was 15 million yuan, and other deductible input tax totaled 120,000 yuan apart from purchased scrap steel. Company A purchased 3 batches of scrap steel that month, including purchasing scrap steel from individual Jia with a purchase amount of 5.05 million yuan and a tax-exclusive sales amount of 5 million yuan, for which a special VAT invoice was issued in reverse, noting tax of 50,000 yuan; purchasing scrap steel from individual Yi with a purchase amount of 2.02 million yuan and a tax-exclusive sales amount of 2 million yuan, for which no "reverse invoice" was issued because individual Yi did not meet the conditions, and no issued-on-behalf invoice was obtained; and purchasing scrap steel from small-scale taxpayer Company B and obtaining a special VAT invoice, with a purchase amount of 3.03 million yuan, a tax-exclusive sales amount of 3 million yuan, and tax of 30,000 yuan noted on the special VAT invoice. Company A obtained invoices compliant with policy provisions for both the purchase of scrap steel from individual Jia and the purchase of scrap steel from Company B; the purchase of scrap steel from individual Yi is a case where an invoice should have been obtained but was not, and the sales revenue of products corresponding to this portion of scrap steel may not apply the VAT immediate refund policy for resource comprehensive utilization products. Therefore, when calculating the refundable tax amount under the immediate refund policy:

　　Sales revenue not eligible for the immediate refund policy = 1500 × [200 ÷ (500+200+300)] = 3 million yuan

　　Deductible input tax amount = 12+5+3 = RMB 200,000

　　Refundable tax amount = [(1500-300)×13%-20]×30% = RMB 408,000.

13. Can invoices issued through "reverse invoicing" be used as pre-tax deduction vouchers for corporate income tax?

　　Answer: According to the Enterprise Income Tax Law of the People's Republic of China and its implementing regulations, the Tax Collection and Administration Law of the People's Republic of China and its implementing rules, the Invoice Management Measures of the People's Republic of China and its implementing rules, and the Announcement of the State Taxation Administration on Issuing the <Administrative Measures for Pre-Tax Deduction Vouchers for Enterprise Income Tax> (No. 28 of 2018) and other tax laws, administrative regulations, rules, and normative documents, when an enterprise incurs expenditures, it shall obtain pre-tax deduction vouchers as the basis for deducting related expenditures when calculating the taxable income amount of enterprise income tax. Invoices issued by resource recycling enterprises through "reverse invoicing" may, if they comply with the relevant provisions of the above tax laws, administrative regulations, rules, and normative documents, serve as pre-tax deduction vouchers for the enterprise's income tax.

14. How should resource recycling enterprises manage pre-tax deduction vouchers for corporate income tax?

　　Answer: The "reverse invoicing" measure facilitates resource recycling enterprises in obtaining compliant pre-tax deduction vouchers for enterprise income tax, and can largely solve the problem of no-invoice cost listing that troubles resource recycling enterprises for enterprise income tax, helping enterprises further standardize accounting and reduce tax-related risks. At the same time, for all types of enterprise income tax pre-tax deduction vouchers, including invoices issued through "reverse invoicing," resource recycling enterprises shall strictly comply with the relevant provisions of tax laws, administrative regulations, rules, and normative documents. If the pre-tax deduction vouchers obtained by an enterprise do not comply with the relevant provisions, the corresponding expenditures may not be deducted pre-tax in the year incurred. If pre-tax deduction is made in violation of the provisions, tax authorities will adjust the taxable income amount in accordance with the law, recover the tax, and handle it strictly in accordance with the relevant provisions of the Law of the People's Republic of China on the Administration of Tax Collection and the Measures of the People's Republic of China for the Administration of Invoices.

Source: State Taxation Administration

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