The State Taxation Administration (STA) in China recently decided to officially promote the optional adoption of digital electronic invoices throughout the country. The announcement, effective from 1 December 2024, confirms that digital invoices will have the same legal effect as paper invoices and will have the following categories:
- VAT special invoices.
- Ordinary invoices.
- Air transport electronic passenger ticket itinerary.
- Railway electronic passenger tickets.
- Motor vehicle sales unified invoices.
- Second-hand car sales unified invoices.
The basic contents of the digital invoice include invoice name, invoice number, invoice date, purchaser information, seller information, unit, quantity, unit price, amount, tax rate, tax amount, total price, and total tax.
The number of the digital invoice will be 20 digits, of which: the 1st and 2nd digits represent the last two digits of the calendar year, the 3rd and 4th digits represent the regional code of the provincial tax bureau where the issuer is located, the 5th digit represents information such as the issuing channel, and the 6th to 20th digits are sequential codes.
The next step for the tax authorities is to develop a regulatory framework and build a unified national electronic invoice service platform to provide digital invoice issuance. The tax authorities will grant the total invoice quota for each taxpayer through the electronic invoice service platform and will make dynamic adjustments based on the taxpayer’s tax risk level, tax credit level, actual business conditions, and other factors.
The issuance of digital invoices is still not mandatory and remains optional for taxpayers. However, this announcement marks the end of the previous pilot project for e-invoicing and is a big step towards the full adoption of electronic invoices that will optimize the taxpayer’s operations improving the administrative efficiency and promoting the digital transformation of the economy and society.
