In the era of fully digitalized e-invoices, analysis of eight major transformation trends in enterprise tax management

Background Introduction

With the full rollout of fully digitalized e-invoices, enterprises face five major challenges in "collecting all," "managing all," "calculating all," "archiving all," and "controlling all" invoices, making the transformation of corporate tax management imperative! In the era of fully digitalized e-invoices, we predict that future corporate tax management will undergo digital transformation toward "business-invoice-account integration," "invoice-tax integration," "business-finance-tax integration," and "electronic business-finance-tax-archive integration."

01 Integrated business-finance-invoice-account

When an enterprise conducts a transaction and issues a fully digitalized e-invoice, the corresponding invoice information immediately enters the smart tax administration system. On this basis, various types of information are collected and analyzed in real time on a "one household" basis by taxpayer and fee payer. The electronic invoice service platform also provides pilot taxpayers with invoice booking identification services, allowing financial personnel to verify promptly and avoid duplicate reimbursement and booking. An invoice is a transaction voucher and must reflect real economic business; at the same time, an invoice is the original voucher for accounting. The first major transformation trend in enterprise tax management is the "integration of business, invoice, and accounting," achieving interconnection among business documents, invoices, and accounting vouchers.

02 Invoice-tax integration

The eight major categories and 24 tags of fully digitalized e-invoices achieve specific classification of electronic invoice functions, statuses, and purposes. Elementization of invoice information broadens data applications, strengthens the linkage of various tax and fee data, and lays the data foundation for realizing "single-form integrated" tax and fee filing pre-filling services. Invoices are the most important tax deduction vouchers for enterprises, involving VAT input tax deductions, corporate income tax pre-tax deductions, and more. The second major transformation trend in enterprise tax management is "invoice-tax integration," achieving traceable reconciliation relationships between invoices and tax filing forms.

03 Business-finance-account integration

With the fully digitalized e-invoice pilot as a breakthrough, smart taxation integrates tax rules, algorithms, and data directly into taxpayers' business operations, automatically calculating the tax amount with each transaction, thereby greatly reducing tax compliance costs and improving tax collection and administration efficiency. The third major transformation trend in corporate tax management is business-finance-tax integration, achieving deep integration of business, finance, and tax, turning finance and tax from a rearview mirror that reflects operating results after the fact into a telescope that serves operating decisions in advance.

04 Electronic business-finance-tax-archive

With the fully digitalized e-invoice pilot as a breakthrough, smart taxation integrates tax rules, algorithms, and data directly into taxpayers' business operations, automatically calculating the tax amount with each transaction, thereby greatly reducing tax compliance costs and improving tax collection and administration efficiency. The third major transformation trend in corporate tax management is business-finance-tax integration, achieving deep integration of business, finance, and tax, turning finance and tax from a rearview mirror that reflects operating results after the fact into a telescope that serves operating decisions in advance.

05 Systematic Data Management

Leqi (Natural System) refers to the platform through which the State Taxation Administration provides eligible enterprises, via direct connection between the tax system and the enterprise's own information system, with tax-related services such as fully digitalized electronic invoices under open rules and unified standards (hereinafter referred to as "Leqi Services"). Enterprises directly connected to Leqi embed relevant rules into their direct connection platform to integrate corresponding tax-related business with their own business systems, achieving multi-scenario, large-scale, compliant, and automated processing of tax-related business. The fifth major transformation trend in enterprise tax management is "systematized data management," structuring tax management systems and tax calculation rules and forming a standardized tax-related data management system.

06 Shared Management Organization

Fully digitalized e-invoices achieve "de-materialization": taxpayers no longer need to obtain dedicated tax control devices in advance; through the "code assignment system," the application for specific invoice number ranges is eliminated, and once invoice information is generated, the system automatically assigns a unique invoice number; through the "quota system," taxpayers are automatically granted a total invoice quota, achieving "zero prerequisites" for invoicing. After logging into the electronic invoice service platform, taxpayers can perform a series of operations such as invoice issuance, delivery, verification, and purpose selection. The electronic invoicing reform has enabled invoice management to break through territorial restrictions, driving the sixth major transformation trend in enterprise tax management, "shared management organization." Enterprises, especially enterprise groups, can build tax shared service centers to handle basic work such as invoice issuance, delivery, verification, as well as tax calculation, accrual, and tax filing.

07 Intelligent Management Processes

While realizing a group-level tax shared service center, enterprises can also simultaneously leverage new technologies to achieve automation and intelligence throughout the entire tax management process, realizing the seventh major transformation trend of enterprise tax management, "intelligent management processes," improving work efficiency and reducing invoice and tax management costs.

08 Platform-Based Management Model

The service targets of Leqi involve two categories: direct connection entities and user entities. A direct connection entity refers to the owner of the direct connection platform, that is, the primary responsible entity, and should be the head office of a headquarters-branch structure, the headquarters of a group enterprise, or an actual controlling entity with equity control relationships, etc. A user entity refers to a user that uses relevant Leqi services through the direct connection platform, and should be the branch offices of a headquarters-branch structure, the headquarters of a group enterprise and its subordinate member enterprises, or affiliated enterprises with equity control relationships with the direct connection entity, etc. The eighth major transformation trend in enterprise tax management is "platform-based management model", advancing group-based tax management through a scalable, modular, and scenario-based cloud platform management model, improving the intelligent and digital tax management information system covering all business segments, all regions, all entities, and all taxes and fees, and promoting the realization of a "world-class financial management system".

The pilot promotion of fully digitalized e-invoices has made "business-invoice-account integration," "invoice-tax integration," "business-finance-tax integration," and "electronic business-finance-tax-archive" urgent aspirations for taxpayers. At present, corporate taxation is rapidly upgrading and transforming toward "systematized data management," "shared management organization," "intelligent management processes," and "platform-based management models."

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Solutions for businesses including sales contract management system, procurement contract management system, fully digitalized Leqi interface project, output automatic 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, professionally and efficiently supporting the transformation and upgrading of enterprise business-finance-tax digital management.

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