How Will the Latest Value-Added Tax Invoice Reform Impact Your China Operations?

In order to further standardize VAT invoice management, the State Administration of Taxation  of the People’s Republic of China decided to revise the Special and Ordinary VAT invoicing while improving the anti-counterfeit technology of special VAT invoices and cargo transportation VAT invoices.

Value-Added Tax Invoice Reform China

Value-Added Tax Invoice Reform China

These changes came into full effect two months ago, and many companies operating in the region will need to adjust their Oracle E-Business Suite instance to comply. As usual, IT Convergence’s response time has been ahead of the curve, and our China team has broken down the changes for everyone to understand.

There are 4 key elements to this reform:

1.    Invoice Code
Invoice Code 8 represents the category of invoices, and freight Special Invoice has been changed from the “7” to “2”, while ordinary invoices have been revised from “6” to “3.”

2.    Invoice Content
Several sections in the Special and Ordinary Invoices have been affected by the new regulations:

•    The “sales unit” (销货单位) and “Purchase Units” (购货单位) columns have been changed to “seller” (销售方) and “purchaser” (购买方)
•    The “goods or the name of taxable”(货物或应税劳务名称)column was adjusted to “goods or taxable, services name”(货物或应税劳务、服务名称)
•    Sales unit of “ticket stub” has been changed to seller
•    Special Invoices associated with secondary uses and Invoice forms have also been adjusted accordingly, where the “Accounting form: Sales voucher” (记帐联:销货方计帐凭证) is now “seller voucher” (记帐联:销售方计帐凭证)
•    The second form Purchase tax credit document (购货方扣税凭证) is revised as purchaser tax credit document (购买方记账凭证”)
•    The purchase unit of accounting vouchers in the second-form invoice has been revised as “purchaser accounting voucher”

3.    Anti-counterfeiting Techniques
The State Administration of Taxation announced new anti-counterfeiting techniques which will help taxpayers and officials identify invoice authenticity, preventing tax evasion and fraud in VAT invoices.

The new Special Invoices and Freight Invoices no longer have the invoice printing supervision seal and the parallel-bar and micro-lettering feature, but have retained some security features and included new ones (such as an increased angle of light and color ring fibers).

The new invoices have a total of nine security features that form a three-level security system aimed to the general public, professionals and experts.

4.    Important Dates
The new invoices came into effect on August 1st, 2014; however, old version invoices continue to be used temporarily.

IT Convergence’s China Practice has developed a solution designed to adapt Oracle E-Business Suite to the new Value-added Tax Invoice reform.  For more information on ITC’ solution, contact us today.

Join our Golden Tax Compliance Webcast

Register for our webcast “How to comply with China’s VAT regulations and Golden Tax System” on October 30th, 2014 and learn why Oracle E-Business Suite is the best ally ensure the success of your China Operations. Click here to reserve your spot today.

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