In May 2016, value-added tax (‘VAT’) was reformed and expanded to several key sectors. The reforms unifies all sectors within a disruptive VAT system. It provides incentives to distribute the tax burden down the VAT chain.

VAT unification stands to decrease the payable VAT and improve cash flow for registered taxpayers.

VAT is offset by a special VAT invoice acting as the VAT credit to offset input VAT from output VAT. Above is a simplified version of the VAT chain.

From 21 January 2021, Digital Special Value-added Tax Invoices (‘VAT e-invoice’) was expanded to 25 regions in China, Beijing, Shanxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangxi, Hainan, Guizhou, Yunnan, Tiber, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Dalian, Xiamen and Qingdao.

Previously, the VAT e-invoice was piloted from 21 December 2020 in the regions including: Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Guangdong, Chongqing, Sichuan, Ningbo and Shenzhen.

VAT e-invoice

The special VAT invoice reform paves greater precision and efficiency in financial management and accounting. The VAT e-invoice can be issued by applying via the electronic tax bureau and verified by the National VAT Invoice Verification Platform (“NVIVP”). It decreases trips to the tax bureau and paperwork, and helps to recover damaged or lost paper special VAT invoice. Equally, individuals and companies may utilise the NVIVP to verify a special VAT invoice, thus reducing false special VAT invoices.

At Horizons, we have worked with clients registered as General Taxpayers on implementing the VAT e-invoice efficiently. Specifically, amending the internal controls for the finance and accountancy team to optimise their VAT e-invoice, saving time and costs.

Contact Us

If you have concerns related to Digital Special Value-added Tax Invoices, please contact Horizons at talktous@horizons-advisory. From RMB 1,500 per session, Horizons can provide insight, expertise and the right solutions for you.