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Provisions for the Use of Special Invoices of Value-Added Tax |
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(Promulgated by State Administration of Taxation on 27 December 1993) The (hereinafter referred to as "the Provisions") are formulated by theState Administration of Taxation to tighten control over the use ofspecial invoices of Value-Added Tax (hereinafter referred to as "specialinvoices") and to ensure the successful implementation of the Value-Added Tax crediting system based on the amount of tax specified oninvoices. Copies of the Provisions are hereby sent to you with thefollowing notice on the pertinent questions: 1. Special invoices are not only important commercial papers intaxpayers' business activities, but also legal certificates on whichboth the seller's tax obligation and the amount of input tax forpurchasers are recorded, with a decisive role in the computation andadministration of Value-Added Tax. Leading comrades of the State Councilhave given instructions that the way to administer special invoicesshould be the same as for bank notes. As such, tax authorities at alllevels in various places must pay great attention to the use andadministration of special invoices, endeavor to gain the support ofgovernment leaders at various levels and assistance from the financial,banking, auditing, administration for industry and commerce, publicsecurity, public prosecution and other departments concerned and to makeearnest efforts to strengthen on work guidance and administer strictlyin accordance with the provisions for the use of special invoices. 2. Starting from January 1, 1994, general taxpayers selling goods ortaxable services must issue special invoices in accordance with theProvisions. In case where special invoices are needed but not issued andordinary invoices are still used, purchasers would not be allowed toclaim any credit on input tax. Ordinary invoices issued in the previous year received by generaltaxpayers can be used as tax-crediting certificates only before January31. For those that cannot be used as certificates for crediting theinput tax of the current period, the input tax which are separated fromstart-of-period inventory, may be readjusted upward in accordance withprovisions of the pertinent policy. 3. Those which violate the Provisions for the Use of Special Invoicesshall be dealt with in accordance with the provisions for relevantpenalties prescribed in the for the Control of Invoices> and the China for Tax Collection and Administration>. 4. If any problems are found in the implementation of the for the Use of Special Invoices of Value-Added Tax, please report themto the State Administration of Taxation promptly. Local governments ordepartments should not alter these Provisions at will in the course oftheir implementation and shall abide to implement accordingly. Article 1 Special invoices of Value-Added Tax (hereinafter referred toas "special invoices") shall be obtained, bought and used only bygeneral taxpayers that pay Value-Added Tax, and not by small-scaletaxpayers or non-Value-Added-Tax taxpayers. Article 2 General taxpayers shall not obtain, buy or use specialinvoices in any one of the following cases: (1) The accounting system is unsound, i.e., it cannot accurately computethe output tax, input tax and the amount of Value-Added Tax payable asrequired under the accounting regulations and by tax authorities; (2) Accurate information for the output tax, input tax, the amount ofValue-Added Tax payable and other information relating to Value-AddedTax cannot be provided to tax authorities. The content of "other information relating to Value-Added Tax" mentionedabove shall be defined by the taxation bureaux which are directly underthe State Administration of Taxation; (3) Engagement in the following activities and failure to correct itselfwithin the time limit prescribed by tax authorities: a. Printing special invoices without authorization; b. Buying special invoices from individual persons or units other thantax authorities; c. Using special invoices borrowed from others; d. Providing special invoices for use by others; e. Failing to issue special invoices in accordance with the requirementsas prescribed in Article 5 of the Provisions; f. Failing to preserve special invoices in accordance with therequirements under the Provisions; g. Failing to file the information on the status of the purchase, useand inventory of special invoices as prescribed in Article 16 of theProvisions; h. Failing to accept inspection by tax authorities according to therequirements under the Provisions. (4) Sale of goods which fall within the tax exempt items.If any of the aforesaid cases occur with a general taxpayer that hasobtained, bought and used special invoices, the tax authorities shalltake away the special invoices retained by that taxpayers. Article 3 Except for the circumstances specified in Article 4 of theseProvisions, general taxpayer selling goods (including those regarded asselling goods), taxable services, or non-taxable services on whichValue-Added Tax shall be levied as prescribed in the Detailed Rules forthe Implementation of Value-Added Tax (hereinafter referred to as"selling taxable items") must issue special invoices to purchasers. Article 4 Special invoices cannot be issued in the followingcircumstances: (1) Selling taxable items to consumers; (2) Selling tax exempt items; (3) Selling goods that have been declared export at the customs officeor selling taxable services abroad; (4) Using goods on items not subject to Value-Added Tax; (5) Using goods on group welfare or for personal consumption; (6) Presenting goods as gifts to others without a consideration; or (7) Providing non-taxable services (except services on which Value-AddedTax shall be levied), transferring intangible assets, or sellingimmovable property.Taxable items can be sold to small-scale taxpayers without issuingspecial invoices. Article 5 Special invoices must be issued in accordance with thefollowing requirements: (1) The writing must be legible; (2) There shall be no alteration;If a special invoice is filled out incorrectly, it should be affixedwith the words "canceled for mistakes" and a new special invoice wouldbe issued. If a special invoice that has been issued and becomes invalidas a result of not being claimed by the purchasers, it shall also behandled as if the invoice is filled out incorrectly. (3) All the items should be filled in; (4) The special invoice and the goods must tally with each other, theamount specified on the special invoice and the amount of moneycollected must tally with each other; (5) The content of all items are correct; (6) All copies of the invoice shall be filled out at one time and thecontent and amount on all copies shall be consistent; (7) The "invoice copy" and the "credit copy" shall be affixed with thespecial stamp for use by the financial department or for use ininvoices; (8) Special invoices must be issued at the time prescribed in Article 6of the Provisions; (9) Counterfeit special invoices shall not be issued; (10) Special invoices detached from invoice books shall not be used; and (11) Special invoices that do not conform with the forms produced on anunified basis by the State Administration of Taxation shall not be used.Any special invoices that do not conform with the aforesaid requirementswill not be used as tax-crediting certificates and purchasers shall havethe right not to accept them. Article 6 The time limit for issuance of special invoices is prescribedas follows: (1) If accounts are settled by the methods of advance payment, bills ofcollection and acceptance, or by authorizing banks to collect payments,it is the day when the goods are despatched; (2) If accounts are settled by the method of payment on delivery, itshall be the day when the payment is received; (3) If the accounts are settled by the methods of credit sales or hirepurchase, it is the day of collection prescribed in contracts; (4) If goods are sold through consignment agents, it is the day when thebills of consignment sales are received from consignee; (5) For the transfer of goods from one establishment to another for saleby a taxpayer who maintains two or more establishments and keeps theiraccounts on a consolidated basis, if Value-Added Tax shall be levied onsuch goods according to the provisions, it is the day when the goods aretransferred; (6) For goods provided to other units or individual business operatorsin the form of investment, it is the day when the goods are transferred;or (7) For goods distributed to shareholders, it is the day when the goodsare transferred.General taxpayers must issue special invoices at the prescribed time,neither earlier nor later. Article 7 Special invoices are basically in quadruplicate, as stipulatedon a unified basis, and each copy shall be used in accordance with thefollowing provisions: (1) The first copy is the "stub copy," which is kept by the seller forreference; (2) The second copy is the "invoice copy," which is used by thepurchaser as payment record for bookkeeping; (3) The third copy is the "credit copy," which is used by the purchaseras a certificate for claiming input tax credit; and (4) The fourth copy is the "bookkeeping copy," which is used by theseller as sales record for bookkeeping. Article 8 Except for the purchase of tax-exempt agricultural productsand import of goods, the input tax on purchasing of taxable items shallnot be credited against the output tax in any one of the followingcircumstances: (1) Failing to obtain special invoices as stipulated; (2) Failing to preserve special invoices as stipulated; or (3) The special invoices issued by sellers do not conform with therequirements prescribed in Paragraphs (1) to (9) and Paragraph (11) ofArticle 5 of the Provisions. Article 9 "Failing to obtain special invoices as stipulated" mentionedin Article 8 of the Provisions refers to one of the followingcircumstances: (1) Failing to obtain special invoices from sellers; or(2) Obtaining only the "bookkeeping copy" or obtaining only the creditcopy. Article 10 "Failing to preserve special invoices as stipulated"mentioned in Articles 2 and 8 of the Provisions refers to one of thefollowing circumstances: (1) Failing to institute a special invoices control system as requiredby tax authorities; (2) Failing to assign a special person to safe-keep special invoices asrequired by tax authorities; (3) Failing to assign a special place for the safe-keeping of specialinvoices as required by tax authorities; (4) Failing to bind "credit copies" into booklets as required by taxauthorities; (5) Unauthorized destruction of the basic copies of special invoicesthat have not been checked or examined by tax authorities; (6) Loss of the special invoices; (7) Damaging (or tearing apart) special invoices; or (8) Failing to meet other requirements for the preservation of specialinvoices specified by the State Administration of Taxation or taxationbureaux which are directly under it. Article 11 If input tax on the purchase of taxable items has alreadybeen credited with the output tax in any of the cases mentioned inArticle 8 of the Provisions, the credited amount shall be deducted fromthe input tax on purchases in the period when the circumstances arediscovered by tax authorities. Article 12 If, after goods have been sold and special invoices have beenissued to a purchaser, the goods are returned or having a discountallowed, they shall be dealt with on the merits of each case and inaccordance with the following provisions: In case when the purchaser has neither paid for the goods nor bookedthem in the accounts, he or she should take the initiative to returnthe original "invoice copy" and "credit copy" to the seller. Afterreceiving these copies, the seller should write the word " cancelled" onthem and on the related "stub copy" and "bookkeeping copy," which maybe used as certificates for deducting the output tax of the currentperiod. Before the seller receives the special invoices returned by apurchaser, he or she cannot deduct the output tax of the currentperiod. In case of discount allowed, the seller shall issue specialinvoices anew on the basis of the discounted prices. If a purchaser has paid for the goods or though the goods have not yetbeen paid but have been booked in the accounts, the purchaser cannotreturn the "invoice copy" and "credit copy", he or she must secure a"goods returned" or "discount claimed" certificate (hereinafter referredto as the "certificate") issued by local competent tax authorities andsend it to seller, so that the latter may use it as the legalcertificates for issuing a red-letter special invoice. Before receivingthe certificate, the seller may not issue any red-letter specialinvoice. Having received the certificate, the seller shall issue a red-letter special invoice to the purchaser in accordance with the amountand prices of goods returned or the amount of money discounted. The"stub copy" and "bookkeeping copy" of the red-letter special invoice canbe used by the seller as certificates for deducting the output tax onsales of the current period, while the "invoice copy" and "credit copy"can be used by the purchaser as certificates for deducting the inputtax. After receiving the red-letter special invoice, the purchaser shoulddeduct the amount of Value-Added Tax specified on that invoice from theinput tax of the current period. Any default or decrease of tax paymentresulting from failure to make such deduction shall be regarded as taxevasion. Article 13 Taxpayers that use electronic computers in issuing specialinvoices must apply to the tax authorities for approval and the use ofnon-computer-printed invoices produced under the control and supervisionof the tax authorities. Article 14 Generally taxpayers that meet the following conditions mayapply to the tax authorities for the use of electronic computers inissuing special invoices: (1) Have specialized electronic computer technicians and operators; (2) Have the capacity and capability of issuing special invoices andprinting out monthly reports of purchases, sales and inventories throughelectronic computers; and (3) Can meet other conditions prescribed by taxation bureaux which aredirectly under the State Administration of Taxation. Article 15 Applicants for the use of electronic computers must filetheir applications with the tax authorities alongside the followinginformation: (1) An analog sample produced by electronic computer based on the formof special invoices (non-computer-printed invoices); (2) The reports of purchases, sales and inventories of the latest month,which is in accordance with the accounting operation procedures,produced by electronic computer. (3) The configuration of electronic computer equipment; (4) Information about the specialized electronic computer techniciansand operators; and (5) Other information requested by the taxation bureaux which aredirectly under the State Administration of Taxation. Article 16 Users of special invoices must truthfully record informationon purchase and use (including cancelled) of invoices and any invoicesleft unused in the data columns appended to the Returns> every month. Article 17 The "goods returned" or "discount claimed" certificate isbasically in triplicate: the first copy is "stub copy", which shall bekept by tax authorities for records; the second copy is "certificatecopy", which the purchaser should send it to the seller and is to beused as the legal certificates for issuing red-letter special invoices;the third copy shall be retained by the purchaser. Certificates must be issued by tax authorities and affixed with thestamp of the tax authorities; certificates cannot be given to thetaxpayers for the issuance of the certificates by themselves. Certificates shall be printed in accordance with the the People's Republic of China for the control of Invoices> and therelevant provisions of the Detailed Rules and Regulations. General taxpayers shall bind the certificate received into booklets asrequired by the tax authorities and keep them in accordance with therelevant certificate preservation provisions. Article 18 The forms of special invoices and the format of "goodsreturned" or "discount claimed" certificates shall be drawn up by theState Administration of Taxation on a unified basis. They shall not bealtered by other organizations or taxpayers without authorization. Article 19 "Tax authorities" and "competent tax authorities" mentionedin the Provisions refer to the State Administration of Taxation and thetax-collecting authorities that are one level above of the taxationbureaux which are directly under the State Administration of Taxation. Article 20 Provisions shall come into effect on January 1, 1994. |
