The Era of Fully Digitalized E-Invoices Has Arrived: A Comprehensive Analysis of Key Operational Points

On November 24, 2024, the State Taxation Administration announced that starting December 1, fully digitalized electronic invoices (abbreviated as "fully digitalized e-invoices") will be promoted and applied nationwide. This is since the pilot implementation of fully digitalized e-invoices in Guangdong Province, Shanghai and Inner Mongolia Autonomous Region on December 1, 2021, and the pilot areas have gradually expanded to the whole country. For the comprehensive promotion and use of this new type of invoice, every company's financial personnel should be familiar with and master it. This article will comprehensively introduce the operations related to fully digitalized e-invoices.

1、 Legal effect of fully digitalized e-invoices

Fully digitalized e-invoices are a type of "electronic invoice" under the Measures of the People's Republic of China for the Administration of Invoices. They are a new type of invoice in which all invoice elements are fully digitalized, numbers are uniformly assigned nationwide, invoicing quotas are intelligently granted, and information is automatically circulated between tax authorities and taxpayers through tax digital accounts and other means. Fully digitalized e-invoices have the same legal effect as paper invoices.

2、 Classification of fully digitalized e-invoices

Fully digitalized e-invoices have a single copy and exist in digital form; the categories include electronic invoice (VAT special invoice) and electronic invoice (ordinary invoice).

Fully digitalized e-invoices can generate specific business invoices based on specific business labels, mainly including: construction services, refined oil, scrapped product purchases, passenger transport services, freight transport services, real estate sales, real estate operating lease services, agricultural product purchases, photovoltaic purchases, collected vehicle and vessel tax, self-produced agricultural product sales, differential taxation, motor vehicles, used vehicles, invoicing on behalf, tolls, medical services, tractors and combine harvesters, rare earth, and other specific business invoices.

3、 Content and numbers of fully digitalized e-invoices

The basic face content of a fully digitalized e-invoice includes: invoice name, invoice number, issuance date, purchaser information, seller information, item name, specification and model, unit, quantity, unit price, amount, tax rate/levy rate, tax amount, total, total including tax, remarks, issuer, etc.

The number of a fully digitalized e-invoice is 20 digits, of which: digits 1-2 represent the last two digits of the Gregorian calendar year, digits 3-4 represent the provincial tax bureau regional code where the issuer is located, digit 5 represents information such as the issuance channel, and digits 6-20 are the sequential code.

4、 Obtaining fully digitalized e-invoices

A taxpayer does not need to use tax control equipment or obtain fully digitalized e-invoices; the system automatically grants a total invoicing quota. That is, in the future, eligible newly established taxpayers will basically achieve "invoicing upon opening".

5、 Monthly fully digitalized e-invoice quota available to the taxpayer

Tax authorities grant a total invoice quota through the electronic invoice service platform based on factors such as the taxpayer's tax risk level, tax credit rating, and actual business conditions, and implement dynamic adjustments. The total invoice quota refers to the upper limit of the total invoicing amount (excluding VAT) of a taxpayer within one calendar month.

There are four methods for dynamically determining the total invoice quota:

（1）Month-beginning quota adjustment

Month-beginning quota adjustment refers to the information system automatically adjusting the taxpayer's total invoice quota at the beginning of each month;

（2）Temporary Quota Adjustment

Temporary quota adjustment means that when a taxpayer with good tax credit has their invoiced amount for the month reach a certain proportion of the monthly total invoice quota for the first time, the information system automatically temporarily increases their monthly total invoice quota once;

（3）Regular Quota Adjustment

Regular quota adjustment means the information system automatically adjusts the taxpayer's monthly total invoice quota;

（4）Manual quota allocation adjustment

Manual quota allocation adjustment means that a taxpayer applies to adjust the total invoice quota due to changes in actual business conditions, and if the competent tax authority confirms that no abnormality is found, it adjusts the total invoice quota for the taxpayer.

[Reminder]If a red-letter fully digitalized e-invoice is issued in the same month as the blue-letter fully digitalized e-invoice, the electronic invoice service platform will simultaneously increase its remaining invoice quota; if a red-letter fully digitalized e-invoice is issued across months, the electronic invoice service platform will not increase its remaining invoice quota.

6、 Specific operations for issuing blue-letter and red-letter fully digitalized e-invoices

The issuance of fully digitalized e-invoices requires identity verification through real-person authentication and other methods, and logging into the nationwide unified standardized electronic tax bureau, using the "Invoice Business" function on its integrated electronic invoice service platform for issuance:

（1）After a blue-letter fully digitalized e-invoice is issued, if sales return (including full return and partial return), incorrect invoicing, suspension of taxable services (including full suspension and partial suspension), sales discount, etc. occur, a red-letter fully digitalized e-invoice shall be issued in accordance with regulations;

（2）If a blue-letter fully digitalized e-invoice has not undergone use confirmation and accounting confirmation, the issuer initiates the red offset process and directly issues a red-letter fully digitalized e-invoice. For agricultural product purchase invoices, scrapped product purchase invoices, photovoltaic purchase invoices, etc., regardless of whether use confirmation or accounting confirmation has been done, the issuer initiates the red offset process and directly issues a red-letter fully digitalized e-invoice;

（3）If a blue-letter fully digitalized e-invoice has undergone use confirmation or accounting confirmation (those used for export tax refund selection and confirmation still follow current regulations), either the issuer or the recipient may initiate the red offset process, and after the counterparty confirms the "Red-Letter Invoice Information Confirmation Form" (hereinafter referred to as the "Confirmation Form"), the issuer issues a red-letter fully digitalized e-invoice. If the Confirmation Form is not confirmed within 72 hours after initiation, it is automatically voided. If the blue-letter fully digitalized e-invoice has been used for export tax refund selection and confirmation, the purchase voucher information must be returned and confirmed as passed, after which the issuer initiates the red offset process and directly issues a red-letter fully digitalized e-invoice;

If the invoice recipient has already used the fully digitalized e-invoice for VAT declaration and deduction, it shall temporarily transfer the VAT amount listed in the Confirmation Form out of the current period's input tax; after obtaining the red-letter fully digitalized e-invoice issued by the issuer, it shall be used together with the Confirmation Form as an accounting voucher.

（4）Operational handling for taxpayers not using fully digitalized e-invoices to issue red-letter invoices。The VAT Invoice Comprehensive Service Platform provides recipient taxpayers with functions such as initiating, receiving and confirming the Confirmation Form; the Electronic Invoice Service Platform provides taxpayers who already use fully digitalized e-invoices with the function of filling out and submitting the Information Form for Issuing Red-Letter VAT Special Invoices (hereinafter referred to as the Information Form).

If the seller has not used fully digitalized e-invoices but the buyer has used fully digitalized e-invoices, the buyer may fill in and submit the Information Form through the electronic invoice service platform; if the seller has used fully digitalized e-invoices but the buyer has not used fully digitalized e-invoices, the buyer may fill in and submit the Confirmation Form through the VAT invoice comprehensive service platform, or confirm the received Confirmation Form.

[Reminder]Where a taxpayer needs to void a fully digitalized e-invoice due to reasons such as an invoicing error,VoidFor fully digitalized e-invoices, red-letter fully digitalized e-invoices shall be issued in full through the electronic invoice service platform.

7、 Issuing fully digitalized red-letter invoices for used car business

（1）When a used car trading market acts only as the invoicing party and issues paper red-letter unified used car sales invoices or red-letter fully digitalized e-invoices bearing the words "unified used car sales invoice" for the buyer and seller actually involved in the used car transaction:

A. If the seller is an individual or a unit that has not completed tax information confirmation, and the purchaser has not confirmed bookkeeping, either party of the buyer and seller may apply to the invoicing party for issuance of a red-letter invoice; after the invoicing party fills out and submits the "Confirmation Form," the invoicing party issues the red-letter invoice, with no confirmation required;

B. If the seller is an individual or a unit that has not completed tax information confirmation, and the purchaser has already confirmed the accounting entry, the purchaser or the invoicing party fills out and submits the Confirmation Form, and after confirmation by the other of the purchaser or invoicing party, the invoicing party issues a red-letter invoice;

C. If the seller is a unit or individual industrial and commercial household that has completed tax information confirmation, and the purchaser has not confirmed the accounting entry, the seller fills out and submits the Confirmation Form, and then the invoicing party issues a red-letter invoice;

D. If the seller is a entity or individual industrial and commercial household that has completed tax information confirmation, and the buyer has confirmed the accounting entry, both the buyer and seller may fill out and submit the Confirmation Form; after confirmation by the other party, the invoicing party issues a red-letter invoice.

（2）When a used car trading market sells a used car under its own name and acts as both invoicing party and seller, issuing to the buyer paper red-letter unified used car sales invoices or red-letter fully digitalized e-invoices bearing the words "unified used car sales invoice":

A. If the purchaser has not confirmed bookkeeping, the used car trading market fills out and submits the "Confirmation Form" to issue a red-letter invoice, with no confirmation required;

B. If the purchaser has already confirmed the accounting entry, either party may fill out and submit the Confirmation Form, and after confirmation by the other party, the used car trading market issues a red-letter invoice.

（3）When a used car trading market purchases a used car and acts as both invoicing party and buyer, issuing on behalf of the seller paper red-letter unified used car sales invoices or red-letter fully digitalized e-invoices bearing the words "unified used car sales invoice":

A. If the seller is an individual or a unit that has not completed tax information confirmation, the used car trading market fills out and submits the "Confirmation Form" before issuing a red-letter invoice;

B. If the seller is a unit or individual industrial and commercial household that has completed tax information confirmation, the used car trading market has not enteredRow EntryFor account confirmation, the seller fills out and submits the Confirmation Form, and the used car trading marketIssue red-letter invoices on site;

C. If the seller is a unit or individual industrial and commercial household that has completed tax information confirmation, and the used car trading market has already confirmed the accounting entry, either party may fill out and submit the Confirmation Form, and after confirmation by the other party, the used car trading market issues a red-letter invoice.

8、 Delivery methods of fully digitalized e-invoices

（1）Issued fully digitalized e-invoices are automatically delivered through the Electronic Invoice Service Platform;

（2）The invoicing party may also deliver fully digitalized e-invoices via email, QR code, download and print, and other methods. If the download-and-print delivery method is chosen, the face of the fully digitalized e-invoice will automatically be marked with and display the "download count" and "print count".

9、 Purpose confirmation of fully digitalized e-invoices

After the invoice recipient obtains a fully digitalized e-invoice, if it needs to be used for declaring and deducting VAT input tax, refined oil consumption tax, or applying for export tax refunds, tax refunds on behalf of others, or selecting refined oil inventory, it shall be done throughConfirm the purpose of the tax digital account. If it is confirmed that the purpose is incorrect, you may apply to the competent tax authority for correction.

10、 Verification and statistics of fully digitalized e-invoices

（1）Entities and individuals may log in to their ownTaxDigital account, Individual Income Tax APP, free query, download, print, and export of issued or received fully digitalized e-invoices;

（2）Through the tax digital account,LogarithmMark whether electronic invoices are posted;

（3）You can use the electronic invoice service platform orNational VAT Invoice Verification Platform, free verification of fully digitalized e-invoice information.

11、 Booking and archiving of fully digitalized e-invoices

Where a taxpayer issues and obtains a fully digitalized e-invoice for reimbursement, accounting, and archiving, it shall comply with relevant regulations such as the Notice of the Ministry of Finance and the National Archives Administration on Regulating the Reimbursement, Accounting, and Archiving of Electronic Accounting Vouchers (Cai Kuai [2020] No. 6) and the Measures for the Administration of Accounting Archives (Order No. 79 of the Ministry of Finance and the National Archives Administration).

Fully digitalized e-invoices downloaded through the tax digital account contain digital signatures and can be posted and archived without affixing a special invoice seal.

12、 Fully Digitalized E-invoice Sample

Electronic invoice (VAT Special Invoice) sample

Electronic invoice (General Invoice) sample

Source: internet compilation

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