Announcement of the State Taxation Administration on Matters Concerning the Administration of Individual Income Tax

I. Why adjust the prepayment rate of individual income tax on business income under "three-stream integration reverse invoicing"?

"Three-Flow Integration Reverse Invoicing" mainly refers to embedding tax rules into online payment platforms and directly connecting to scrap recycling activity information, so that when resource recycling enterprises initiate payment to natural person sellers of scrapped products (hereinafter referred to as natural person sellers) on the online payment platform, the system automatically completes the calculation of the natural person seller's tax payable, withholding and remittance to the treasury, and pre-filled invoicing, achieving the "three-flow integration" of payment-invoice flow, person-enterprise flow, and capital flow, and realizing "payment equals invoicing, invoicing equals tax payment, tax payment equals treasury remittance." For resource recycling enterprises, this model has advantages such as no longer needing to file on behalf of natural person sellers in the following month, no need to separately establish various purchase ledgers proving business authenticity, and more standardized processes. For natural person sellers, it also has advantages such as paying taxes upon invoicing and lower tax-related risks. To encourage more recycling enterprises and natural person sellers to choose the "three-flow integration reverse invoicing" model, and in light of the technical advantage of "three-flow integration reverse invoicing" in enabling real-time cumulative sales, we have appropriately lowered the prepayment rate of individual income tax on business income under this model.

II. How does this announcement adjust the prepayment rate of individual income tax on business income under "three-streams-in-one reverse invoicing"?

According to this Announcement, starting from July 1, 2026, where a natural person seller sells acquired scrapped products to a resource recycling enterprise through "three-flow-in-one reverse invoicing," the portion of the annual sales amount of "three-flow-in-one reverse invoicing" (excluding VAT) not exceeding 600,000 yuan shall be subject to prepayment of individual income tax on business income at a reduced rate of 0.25%, and the portion exceeding 600,000 yuan shall still be subject to prepayment of individual income tax on business income at 0.5%. At the same time, where a natural person seller sells scrapped products through other forms of "reverse invoicing," individual income tax on business income shall still be prepaid at 0.5% of the sales amount.

For example, seller Li sold scrapped products acquired through "three-flow-in-one reverse invoicing" to resource recycling enterprise Jia for the first time on November 25, 2026, in the amount of 300,000 yuan, and had already used "three-flow-in-one reverse invoicing" with another resource recycling enterprise Yi for 400,000 yuan between July 1, 2026 and before this sale, and prepaid tax of 400,000 × 0.25% = 1,000 yuan. Then the tax to be prepaid for this "three-flow-in-one reverse invoicing" is:

(60-40)×0.25%+(30+40-60)×0.5%=RMB 0.1 ten thousand

III. For income obtained by individual sellers from selling and purchasing scrapped products through "three-flows-in-one reverse invoicing", do they still need to handle the annual reconciliation of individual income tax on business income?

According to this Announcement, for "three-flow-in-one reverse invoicing," except for differences in the prepayment rate, other services and collection and administration provisions shall be executed in accordance with the Announcement of the State Taxation Administration on Matters Concerning "Reverse Invoicing" by Resource Recycling Enterprises to Natural Person Sellers of Scrapped Products (No. 5 of 2024). Therefore, sellers shall, before March 31 of the year following the "reverse invoicing," handle annual final settlement of business income on their own with the competent tax authority at the place of business management.

Still taking the above-mentioned Li as an example, when handling the annual individual income tax settlement for business income in the following year, if there is no other "reverse invoicing" income and no other business income in that year, and complete and accurate cost and expense information cannot be obtained and the annual taxable income cannot be correctly calculated, the tax authority shall assess and collect tax based on a 5% deemed profit rate and an applicable tax rate of 5%-35%. The annual tax payable is: (40 + 30) × 5% × 10% - 0.15 = RMB 2,000. Since the prepaid tax equals the annual tax payable, no refund or supplementary payment is required in the annual settlement.

IV. If a resource recycling enterprise wants to conduct "three flows in one reverse invoicing", how should it prepare specifically?

If a resource recycling enterprise wants to adopt "three-flow integration reverse invoicing," it needs to complete the following preparations:

(1) Select the corresponding payment platform (such as UnionPay Merchant Services, WeChat, Alipay, China Merchants Bank, Industrial and Commercial Bank of China, etc.) and open the relevant account.

(II) The payment platform invites the resource recycling enterprise through the Electronic Tax Bureau to serve as a Leqi user entity, and the resource recycling enterprise confirms its consent through the Electronic Tax Bureau.

(3) According to the resource recycling enterprise's own business needs, the payment platform organizes interface development and function integration.

(4) After the functional integration is completed, "three-flow integration reverse invoicing" can be automatically triggered when the resource recycling enterprise makes an online payment.

V. In the "three flows in one reverse invoicing" of resource recycling enterprises, how do individual sellers operate?

When resource recycling enterprises conduct "three flows in one reverse invoicing," the operating procedures for individual sellers on various payment platforms differ slightly. Taking the Alipay platform as an example, the specific process is as follows:

(1) A resource recycling enterprise purchases waste from individual sellers, enters transaction information such as goods name, unit price, and weight, and the platform automatically calculates the payment amount, automatically pre-fills the invoice, and automatically generates tax payment information to be paid.

(II) The resource recycling enterprise displays the "payment code" to the individual seller.

(3) After the individual seller scans the code and pays the tax into the treasury, the payment is automatically transferred to the individual's account, and the invoice is automatically issued and uploaded.

VI. Has the individual income tax policy supporting residents in exchanging and purchasing housing been adjusted?

According to the Announcement of the Ministry of Finance, the State Taxation Administration, and the Ministry of Housing and Urban-Rural Development on the Continuation of the Individual Income Tax Policy Supporting Residents in Swapping Housing (Announcement No. 3 of 2026), the individual income tax policy supporting residents in swapping housing is continued until December 31, 2027. The specific provisions and filing procedures also continue the previous provisions, and eligible taxpayers shall handle matters by reference to the Announcement of the State Taxation Administration on Matters Concerning the Administration of the Individual Income Tax Policy Supporting Residents in Swapping Housing (Announcement No. 21 of 2022).

To further implement the "Notice of the State Council on Issuing the Action Plan for Promoting Large-Scale Equipment Updates and Consumer Goods Trade-Ins" (Guo Fa [2024] No. 7) and Announcement of the Ministry of Finance, the State Taxation Administration and the Ministry of Housing and Urban-Rural Development on Continuing the Implementation of Individual Income Tax Policies Supporting Residents' Housing Exchange(No. 3 of 2026), the relevant tax collection and administration matters are hereby announced as follows:

I. Starting from July 1, 2026, when a seller of scrapped products as a natural person sells acquired scrapped products to a resource recycling enterprise through "three-flow-in-one reverse invoicing," the portion of the annual sales amount (excluding VAT) under "three-flow-in-one reverse invoicing" not exceeding 600,000 yuan shall be subject to a reduced prepayment rate of 0.25% for individual income tax on business income, and the portion exceeding 600,000 yuan shall still be subject to a prepayment rate of 0.5% for individual income tax on business income. Other services and collection administration provisions shall follow Announcement of the State Taxation Administration on Matters Concerning "Reverse Invoicing" by Resource Recycling Enterprises to Individuals Selling Scrap Products(No. 5 of 2024) shall apply.

II. According to Announcement of the Ministry of Finance, the State Taxation Administration and the Ministry of Housing and Urban-Rural Development on Continuing the Implementation of Individual Income Tax Policies Supporting Residents' Housing Exchange(No. 3 of 2026), during the period from January 1, 2026 to December 31, 2027, if a taxpayer sells their own home and repurchases a home in the same city within 1 year after selling the current home, they may apply as required for a refund of the individual income tax already paid on the sale of the current home; the specific service and tax collection and administration provisions shall refer to Announcement of the State Taxation Administration on Collection and Administration Matters Concerning the Individual Income Tax Policy Supporting Residents in Swapping Housing(No. 21 of 2022) shall apply.

Hereby announced.

State Taxation Administration

May 29, 2026