On January 15, 2024, the State Taxation Administration issued the decision of the State Taxation Administration on amending the Rules for the Implementation of the Invoice Management Measures of the People's Republic of China. The revised implementation rules will come into effect on March 1, 2024. Kaizen would like to draw your attention to the impacts of the reversion on companies registered in China to reduce the invoice using risks.

1. To clarify the situation of "inconsistent with the actual business situation"
   
   The revision has specified the "inconsistent with the actual business situation" and detailed the circumstances of the identification of the behavior of issuance of false invoice. In practice, many corporate financial or sales personnel tend to only check the total amount of invoices and buyer information, and very few would pay attention to the name of the commodity and business items. According to the revised rules, invoices issued or received that do not conform to the actual business situation will be deemed as false invoices. Therefore, this will be a risk for enterprises to avoid.
   
   Relevant provisions are quoted as below:
   
   Article 21 of the Measures for the Administration of Invoices of the People's Republic of China stipulates that no unit or individual shall have the following acts of falsifying invoices:
   

   (1)	Issuing invoices for others or for oneself that do not conform to the actual operation of the business;
   (2)	Allowing others to issue invoices for themselves that do not conform to the actual business situation;
   (3)	Introducing others to issue invoices that do not conform to the actual business situation.

   
   Article 29 of the revised "Rules for the Implementation of the Invoice Management Measures of the People's Republic of China" specifies that specific acts inconsistent with actual business operations refer to any of the following acts.
   
   

   (1)	Issuing or obtaining invoices without purchasing or selling commodities, providing or accepting services, or engaging in other business activities;
   (2)	Purchasing and selling commodities, providing or receiving services, engaging in other business activities, but the buyer, seller, commodity name or business item, amount, etc. specified in the invoice issued or obtained do not correspond to the actual situation;

   
   
2. To explain the specific situation of "change amount"
   
   In actual operation, many enterprises only care about the total amount of sales on the invoice when issuing invoices, resulting in discounts given to customers are not reflected in accordance with the standards of issuing discount invoices, and the corresponding discount is deducted directly from the unit price or quantity of goods. According to the revised rules, enterprises shall issue invoices in accordance with the unit price and quantity of goods and shall not change the unit price and quantity of goods at will to avoid tax risks.
   
   Relevant provisions are quoted as below:
   
   Article 19 of the Measures for the Administration of Invoices of the People's Republic of China stipulates that all units and individuals engaged in production and business activities shall obtain invoices from the payee when making payments for goods, services, and other business activities. They shall not request to change the item name and amount when obtaining invoices.
   
   Article 25 of the revised Rules for the Implementation of the Invoice Management Measures of the People's Republic of China clearly stipulates that the amount shall not be changed, including the unit price and quantity involved in the calculation of the amount.
   
   
3. To elaborate the situation of "substitute invoices with other vouchers"
   
   Article 40 of the revised Rules for the Implementation of the Invoice Management Measures of the People's Republic of China elaborates the provisions of item 6 of Article 33 of the Invoice Management Measures, and the use of other vouchers to replace invoices includes the following situations:
   

   (1)	Where invoices shall be issued but not issued, using other vouchers instead of invoices;
   (2)	Where invoices should be obtained but not obtained, using other vouchers or self-issued vouchers except invoices for tax deduction, export tax refund, pre-tax deduction, and financial reimbursements.

   
   The tax authorities are entitled to impose a penalty of less than 10,000 yuan on those enterprises who use other vouchers instead of invoices and confiscate all the illegal gains. To avoid such potential risks, it is recommended to claim with the suppliers for formal invoices in a timely manner and avoid the use of other vouchers to replace invoices.
   

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