Editor's Note: Recycling of renewable resources is a key link in the comprehensive utilization of resources, and is of great significance in promoting the development of circular economy and realizing green, low-carbon and high-quality development. This year, the State Council has issued a number of documents to promote the construction of waste recycling system, accelerate the green transformation of the development mode, "to promote large-scale equipment renewal and consumer goods for the old for the new action program" (State Development [2024] No. 7) put forward the promotion of resource recycling enterprises to the natural person of end-of-life product sellers "reverse invoicing" practice, and the promotion of resource recycling enterprises to the natural person of end-of-life product sellers "reverse invoicing" practice. Improve tax policy support. For a long time, the lack of "source invoices" has been restricting the development of resources recycling industry. Based on the aforementioned policy guidance and industry difficulties, on April 24, the State Administration of Taxation issued the "Announcement on Matters Relating to "Reverse Invoicing" by Resource Recycling Enterprises to Sellers of End-of-Life Products to Natural Persons". "(SAT Announcement No. 5 of 2024, hereinafter referred to as "Announcement No. 5"), which makes specific provisions on the scope of invoicing parties, invoicing requirements, invoice functions and tax supervision of the policy of "reverse invoicing". Notice No. 5 makes specific provisions on the scope of the "reverse invoicing" policy, invoicing requirements, invoice functions and tax supervision. Reverse invoicing in the resource recycling segment involves the tax payment of the seller and the VAT input credit and pre-tax deduction of the recycling enterprise, so it is important to correctly understand the requirements and responsibilities of the main parties in the "reverse invoicing" business, Correctly understanding the requirements and responsibilities of each subject in the business of "reverse invoicing" and the impact of "reverse invoicing" on the recycling business are of great significance for improving the degree of business compliance and avoiding and preventing tax-related risks.

The basic policy of "reverse invoicing" stipulated in Circular No. 5 is as follows: Starting from April 29, 2024, a natural person seller of end-of-life products ("seller") sells end-of-life products to a resource recycling enterprise, and the eligible resource recycling enterprise can issue an invoice to the seller (i.e., "reverse invoicing"). The eligible resource recycling enterprises can issue invoices to the sellers (i.e. "reverse invoicing"). Based on the common business model of the resources recycling industry in practice, this article summarizes the eight key points that need to be concerned about the application of the "reverse invoicing" policy for readers' reference.

Point 1: Individuals selling end-of-life products to recycling enterprises are not subject to "reverse invoicing".

Notice No. 5 refers to the natural person end-of-life products sellers include two categories, one is the sale of their own used end-of-life products of natural persons, and the second is the sale of end-of-life products purchased, not more than 12 consecutive months (natural months, the same below) "reverse invoicing" cumulative sales of not more than 5 million yuan (excluding value-added tax, the same below) of natural persons. For natural persons selling end-of-life products for 12 consecutive months "reverse invoicing" cumulative sales of more than 5 million yuan, resource recovery enterprises shall not be "reverse invoicing" to them.

That is, the main body of sales is a natural person, recycling enterprises can "reverse invoicing", Notice No. 5 of the "seller" in practice is usually manifested in the sale of daily life generated by scrap iron, waste plastic bottles, waste paper and other waste products of urban and rural residents, the type of individual Natural persons are the source of end-of-life products; another category is scavengers, recycling individuals, these natural persons from individuals or waste enterprises to buy end-of-life products for collection and sale.

All along, a considerable part of the recycling enterprise is to purchase the end-of-life products from individuals, can the recycling enterprise "reverse invoicing"? According to the Implementing Rules of the Provisional Regulations on Value-added Tax, individuals refer to individual industrial and commercial households and other individuals, and the Announcement of the State Administration of Taxation on Several Matters Concerning the Registration and Management of VAT General Taxpayers (Announcement of the State Administration of Taxation No. 6 of 2018) further stipulates that "other individuals" refer to natural persons. Therefore, in the context of the tax law, self-employed persons are not natural persons, and according to the provisions of Notice No. 5, self-employed persons do not belong to the category of "seller", and the recycling enterprise acquires end-of-life products from self-employed persons, and the "reverse invoicing" cannot be applied.

Point 2: Recycling enterprises must meet two conditions before "reverse invoicing" is allowed.

Article 2 of Circular No. 5 stipulates that the recycling enterprises that can be "reverse invoiced" include both units and individual entrepreneurs. Recycling enterprises need to meet two conditions to apply for "reverse invoicing", one is actually engaged in resource recovery business, and the second is to obtain the appropriate business license or registration: 1) engaged in the collection of hazardous wastes, should be obtained in accordance with the provisions of the hazardous waste business license; 2) engaged in the recycling of end-of-life motor vehicles, should be obtained End-of-life motor vehicle recycling and dismantling enterprise qualification certificate; 3) other resources recycling enterprises should be in line with the requirements of the national business authorities issued by the management of renewable resources recycling, business entity registration, and in the business sector to complete the record of renewable resources recycling operators.

(i) Recycling enterprises need to keep purchase and sale information to prove the authenticity of the business

In terms of business authenticity, according to the provisions of Article 17 of Circular No. 5, resource recycling enterprises implementing "reverse invoicing" should keep materials that can prove the authenticity of the business, including the purchase contract or agreement for the acquisition of end-of-life products, transportation invoices or vouchers, weighing slips for the goods, payment records for transfers, etc., and set up a purchase ledger to record the following in detail The time, place, seller and contact information, name, quantity and price of the end-of-life products of each acquisition business are recorded for inspection.

Among the above information, it is usually difficult for recycling enterprises to obtain transportation vouchers. In practice, the end-of-life products are generally transported by the seller himself, the agreed settlement price has included transportation costs, the seller's own transportation or find individual drivers, fleet transportation, it is difficult to issue transport invoices to the recycling business, recycling enterprises can retain vehicle information (driver's name, license plate number, driver's license, driving license, etc.), take photos of the transport vehicle, save the transportation cost of the voucher payment, etc., in order to corroborate the acquisition of business and transportation really happened. In addition, Circular No. 5 also requires recycling enterprises to keep records of transfer payments. When paying for goods to sellers, recycling enterprises should avoid cash payments and keep good records of bank transfers, WeChat or Alipay payments, etc.

(ii) The recycling type should apply for the corresponding business qualification according to the requirements.

For business qualification, hazardous waste business license and end-of-life motor vehicle recycling and dismantling enterprise qualification certificate for recycling enterprises have more stringent site, technology and process requirements, etc., engaged in the acquisition of such end-of-life products recycling enterprises should pay attention to the relevant policy requirements; in practice, the more is through the industrial and commercial registration to obtain the recycling qualification of recycling enterprises, the "renewable resources recycling management approach Provides that engaged in renewable resources recycling business activities, must meet the conditions for registration of industrial and commercial administration, industrial and commercial registration, before engaging in business activities. Renewable resources recycling operators to record matters integrated into the business license, market supervision departments approved business registration, through the provincial sharing platform to share enterprise information to all relevant departments.

Point 3: Recycling enterprises shall adjust the invoice amount according to actual business needs

Articles 5 and 6 of Circular No. 5 stipulate that recycling enterprises shall issue invoices labeled with the words "acquisition of end-of-life products" to sellers online through the electronic invoice service platform or VAT invoice management system. When recycling enterprises issue "reverse invoices" and taxpayers issue their own invoices for the sale of end-of-life products, they should correctly select the "end-of-life products" category code in accordance with the new Tax Classification of Goods and Services Coding Table.

In practice, considering the different types of goods actually recycled by enterprises, the large number of sellers, the continuity of goods purchase and sale, etc., the recycling enterprises have different demands for the number of invoices and the amount of invoices, etc. Article 7 of the Announcement No. 5 stipulates that, the recycling enterprises may, according to the actual operational needs of "reverse invoicing", apply to the competent tax authorities for the following in accordance with the regulations Adjustment of invoice amount or maximum invoicing limit and number of copies. Therefore, recycling enterprises can reasonably apply for adjusting the original invoice quota according to the types of end-of-life products recovered in daily operation, the number of sellers and the volume of transactions, the amount of each transaction and the annual transaction amount, so as to avoid insufficient remaining available invoice quota to affect the issuance of invoices in the same month. In addition, the Implementing Rules of Invoice Management Measures stipulates that "units and individuals filling out invoices must issue invoices when confirming business income in the occurrence of business operations", and recycling enterprises should correctly grasp the time limit of invoicing, avoid invoicing in advance or excessively delayed invoicing, and pay attention to the standardization of the time point of invoicing.

Point 4: The invoices issued in reverse can be used as the pre-tax deduction vouchers for the enterprise income tax

Article 16 of Announcement No. 5 stipulates that "the invoices issued by resource recycling enterprises in the reverse direction can be used as pre-tax deduction vouchers for enterprise income tax if they comply with the relevant provisions of tax laws, administrative regulations, rules and normative documents. If the invoices do not comply with the provisions for pre-tax deduction, they shall be dealt with strictly in accordance with the relevant provisions of the Law of the People's Republic of China on Administration of Tax Collection and the Measures of the People's Republic of China for the Administration of Invoices".

According to the provisions of the Enterprise Income Tax Law and its implementing regulations and the Measures for the Administration of Invoices for Pre-tax Deduction of Enterprise Income Tax, the invoices issued by recycling enterprises in the reverse direction need to satisfy the three principles of authenticity, legality and relevance before they can be used as pre-tax deduction vouchers for enterprise income tax. In practice, tax enterprises usually dispute over authenticity and relevance. Authenticity refers to the fact that the invoice issued by the recycling enterprise can reflect the authenticity of the acquisition business and the expenses incurred for the acquisition have been actually incurred; relevance refers to the fact that the invoice issued by the recycling enterprise is related to the acquisition expenses reflected in the invoice and has the power of proof.

The Announcement of the Ministry of Finance and the State Administration of Taxation on the Improvement of Value-added Tax Policies on Comprehensive Utilization of Resources (Announcement No. 40 of the Ministry of Finance and the State Administration of Taxation of 2021, hereinafter referred to as the "Announcement No. 40") permits general VAT taxpayers engaging in the recycling of renewable resources to apply the simplified method of tax calculation for the sale of renewable resources they acquire, which has reduced the This has reduced the VAT burden of recycling enterprises to a certain extent. However, some recycling enterprises have certain concerns about the application of Circular No. 40 in practice due to the lack of response to the issue of pre-tax deduction vouchers for enterprise income tax. After the "reverse invoicing" policy has been implemented, recycling enterprises can choose to apply the VAT simplified tax calculation method, which, together with the "reverse invoicing" policy, can solve the problem of pre-tax deduction for EIT while alleviating the burden of VAT.

Point 5: VAT deduction of 1% or 3% for VAT invoices issued in the reverse direction

Article 8 of Circular No. 5 stipulates different types of "reverse invoices" based on different tax calculation methods of recycling enterprises: recycling enterprises selling end-of-life products applying the VAT simple tax calculation method can issue ordinary invoices in reverse, and they are not allowed to issue special VAT invoices in reverse; applying the general VAT calculation method can issue special VAT invoices and ordinary invoices in reverse; and recycling enterprises selling end-of-life products applying the general VAT calculation method can issue special VAT invoices and special VAT invoices in reverse. Special invoices and ordinary invoices can be issued in the reverse direction. At the same time, it is clear that the resource recycling enterprises can deduct the tax stated in the special VAT invoices issued in reverse according to the regulations. The exact amount of "tax stated on the VAT special invoice" needs to be differentiated in different cases. For sellers with monthly sales of less than 100,000 RMB, if the seller waives the tax exemption, the recycling enterprise can issue VAT invoices with a tax rate of 1% or 3% for input credit, and for sellers with monthly sales of more than 100,000 RMB, the recycling enterprise can issue VAT invoices with a tax rate of 1% or 3% (minus 1% for seller's waiver) for credit. According to this provision, the recycling enterprise that chooses to apply the "reverse invoicing" can obtain 1% or 3% VAT input credit in the case of acquisition business, and should issue invoices according to the VAT rate of 13% in the case of external sales. The recycling company then faces a heavier VAT burden when purchasing from sellers.

For example, Company A is a general VAT payer, and its sales of end-of-life products are subject to the general VAT method, and it has obtained the qualification of "reverse invoicing".20 In June 2024, Company A purchased waste plastics from A, a natural person who sells end-of-life products, and the amount of the purchase was 2.02 million RMB. Company A chooses to issue a reverse VAT invoice for the above purchase, which specifies sales of RMB 2 million excluding tax and tax of RMB 20,000 yuan. Company A can deduct the above input tax amount of RMB20,000 when calculating the VAT payable for the period belonging to June 2024. Company A should issue VAT invoice at 13% for the external sale of the scrap plastics and pay VAT after deducting RMB20,000 (other credits are not counted) of the input tax amount.

Point 6: Direct sales of end-of-life products by waste-producing enterprises should be self-invoicing, the use of natural persons to sell and hide income will face greater regulatory risks.

Announcement No. 5 provides that the end-of-life products refers to "in the process of social production and life consumption, has lost all or part of the original value of the product". That is, the end-of-life products applicable to "reverse invoicing" can be derived from industrial production waste, or from residents' daily life waste. From Article 6 of Announcement No. 5, "reverse invoicing" of the "end-of-life products" category code and Annex 2 can be seen, the category of end-of-life products, including scrap iron and steel, waste non-ferrous metals, waste plastics, waste tires, waste paper, waste electrical and electronic products, end-of-life motor vehicles, waste textiles, waste glass, waste batteries, waste paper, waste paper, waste paper, waste paper, waste paper, waste paper, waste paper, waste paper, waste paper, waste paper and waste paper. Textiles, waste glass, waste batteries and so on.

One of the factors of insufficient VAT input deduction at the source of acquisition of waste materials for a long time is the sale of marginal wastes by waste-producing enterprises without invoices. Scrap iron and steel, for example, "China's resources recycling industry development report (2023)" shows that China's scrap iron and steel mainly from large and medium-sized iron and steel enterprises. If the iron and steel enterprises sell scrap steel directly to recycling enterprises, they need to issue their own invoices to recycling enterprises and declare taxes, and this type of invoicing does not belong to the scope of application of "reverse invoicing". In practice, some iron and steel enterprises or for the purpose of concealing income, less tax, etc., did not sell scrap iron and steel directly to recycling enterprises, but without invoices sold to natural persons, individual recycling stations and other retailers, and the retailer's own sales do not carry invoices, naturally, will not require the iron and steel enterprises to issue invoices, VAT invoices chain at the source that has been broken. After the introduction of the "reverse invoicing" policy, the business process of "steel enterprises - sellers - recycling enterprises - scrap enterprises" may be changed.

Announcement No. 5 "scrap iron and steel" category under the specific code, including "manufacturing scrap iron and steel", refers to the use of steel to manufacture end-use commodities of the edge of the residue, the edge of the residue from the iron and steel enterprises belong to the "reverse invoicing The type of end-of-life product that is "reverse billed". Under the chain of "steel enterprise - seller - recycling enterprise - waste enterprise", the seller acquires scrap iron and steel from the steel enterprise, and the recycling enterprise purchases the acquired scrap iron and steel from the seller, and the "reverse invoicing" can be applied. "Reverse invoicing" policy. Under the "reverse invoicing" policy, if the seller sells scrap products, the seller will need to pay for the operating income, and the seller will need to issue the relevant purchase payment vouchers as the basis for the deduction of costs and expenses for the operating income, and the previous practice of the waste-producing enterprises to sell scrap to individuals to hide their income will be subject to a greater tax risk.

Point 7: "reverse invoicing" of the recycling enterprises should be on behalf of the payment of taxes and fees, not in accordance with the regulations need to bear the responsibility of making up payments

(i) Sales by natural persons are generally not paying or underpaying taxes.

Natural person's income due to decentralization, randomness and other factors, for a long time is the difficulty and focus of tax supervision, especially in the field of renewable resources - in the original tax policy, natural person sales of waste materials should be applied to the tax bureau on behalf of invoices, the tax bureau according to the invoices issued on behalf of the collection of value-added tax, income tax, etc., natural persons, but the natural person is often in practice, the natural person should apply to the tax bureau on behalf of invoices issued on behalf of value-added tax, income tax. However, in practice, natural persons often sell waste materials without invoices, and the supervisory function of "controlling tax by invoices" is limited. The non-payment and underpayment of tax on sales by natural persons and the broken VAT chain at the source of the recycling chain have become two major problems in the tax supervision of the resources recycling industry. At present, the tax authorities have dealt with a number of cases in which natural persons selling waste materials did not make tax declarations, and the individuals involved in the cases were required to pay back taxes, impose late payment fees and fines. This article shows a case publicized by a local tax bureau:

Upon inspection, in 2021, you engaged in the business of buying and selling scrap steel in your personal name, and upon inspection of your personal bank account, it was found that you collected 21593281.89 yuan (including tax) for the sale of scrap steel in 2021, of which 158693.10 yuan was collected in the first quarter of 2021, 3099152.88 yuan in the second quarter, 9015040.00 yuan in the third quarter and 9320395.91 yuan. You did not declare tax to the tax authorities in accordance with the regulations after obtaining the above income, and there is a tax-related problem of underpayment of VAT and surtax and personal income tax. ...... Penalties: According to the second paragraph of Article 64 of the Tax Administration Law, "If a taxpayer fails to make a tax declaration and fails to pay or underpays the tax due, the tax authorities shall recover the unpaid or underpaid tax, late payment fees and impose a fine of not less than 50% but not more than five times of the unpaid or underpaid tax". The provisions of the "fine", the penalty for underpayment of tax 527093.08 yuan fifty percent fine, a fine of 263546.54 yuan.

(ii) "Reverse invoicing" requires recycling enterprises to handle taxes and fees, and the pricing model of recycling chain may be adjusted.

Article 11 of Announcement No. 5 stipulates that the resource recycling enterprise shall, when "reverse invoicing" to the seller, act on behalf of the seller in accordance with the provisions of the value-added tax (VAT) and surcharge, personal income tax declaration matters, and report to the competent tax authorities within the declaration period of the following month the "Report Form on Taxes and Fees Acting on Behalf of the Taxes and Fees Acting on Behalf of the Taxes and Fees Acting on Behalf of the Taxes and Fees Acting on Behalf of the Taxes and Fees Reporting Form" and pay the taxes and fees acting on behalf of the seller according to the provisions. Taxes and Fees.

At the VAT level, according to the Provisional Regulations on Value-added Tax and its implementation rules, the sale of used articles by natural persons is exempted from VAT, and the natural persons in this case correspond to the first category of sellers in the context of "reverse invoicing", i.e., the natural persons who sell used end-of-life products. ". Therefore, the sale of end-of-life products by such sellers is exempt from VAT. For the second category of sellers, i.e. "natural persons who sell acquired end-of-life products and whose cumulative sales of 'reverse invoicing' do not exceed 5 million yuan for a period of not more than 12 consecutive months", their sales of end-of-life products can enjoy the VAT exemption and 3% VAT exemption for small-sized taxpayers with monthly sales of less than 10 million yuan, and the VAT exemption of less than 3 million yuan for small-sized taxpayers. Their sales of end-of-life products can enjoy the preferential tax policies such as VAT exemption for small-scale taxpayers with monthly sales of less than 10,000 yuan and a reduction of the 3% levy rate by 1% for the calculation of VAT payment. If the seller sells scrap products through "reverse invoicing" and the sales volume of the month exceeds 100,000 yuan, the resource recycling enterprise that "reverse invoices" the seller shall pay VAT for the seller according to the amount of the respective "reverse invoices" of the month. The resource recycling enterprise that "reverse invoices" the sales of scrap products exceeding 100,000 RMB in the same month shall, according to the amount of the respective "reverse invoices" in the same month, make VAT and surtax declarations on behalf of the seller, and pay the required tax.

At the individual income tax level, Circular 5 stipulates that sellers of end-of-life products through "reverse invoicing" shall prepay 0.5% of the sales amount for the individual income tax on business income. Before March 31 of the year following the year of "reverse invoicing", the seller should handle the remittance of business income to the competent tax authority in the place of business management. The total income of the seller for each taxable year, less costs, expenses and losses, shall be the taxable income, and a progressive tax rate of 5% to 35% shall be applied. For sellers who have been selling without invoices for a long period of time without paying taxes, "reverse invoicing" regulates the payment of taxes on their sales, which in turn impacts the original recovery pricing system. For recycling enterprises and sellers who choose to apply "reverse invoicing", their recycling pricing may face adjustment.

(iii) Recycling enterprises that fail to pay the required taxes will face the consequences of suspending their qualifications and paying back taxes.

The "reverse invoicing" policy introduces the concept of "handling" VAT and surcharges and paying the handling tax. If the party selling the goods is a VAT payer, the seller will normally declare and pay the VAT on its own, but the Provisional Regulations on VAT provide for an exception where the buyer will declare and pay on behalf of the taxpayer as a withholding agent: if a foreign unit or individual sells labor services in the country, and if the unit or individual does not have a business organization in the country, its agent in the country shall be the withholding agent; and if the unit or individual does not have an agent in the country, the buyer shall be the withholding agent. If there is no agent in the country, the purchaser shall be the withholding agent. The "reverse invoicing" policy has set up a VAT payment system, whereby the "reverse invoicing" recycling enterprises will handle the VAT, surcharges and personal income tax declarations on behalf of the enterprises and pay the tax on behalf of the enterprises.

Recycling enterprises should pay attention to this obligation to pay on behalf of the seller, and if they fail to pay the tax in accordance with the regulations, they will face the risk of suspension of the "reverse invoicing" qualification and the recovery of tax and late payment fees. If a recycling enterprise has paid the purchase price to the seller but has not withheld the VAT, personal income tax and other taxes corresponding to the purchase price, it will need to make up for the unpaid agent's taxes and fees and impose late fees when it has already borne the taxes and fees, which will result in a heavier economic burden; on the other hand, Circular No. 5 has not yet provided any information on the duration of the suspension of the qualification of "reverse billing", whether it can be restored and how it can be restored. On the other hand, Circular No. 5 has not yet stipulated the period of suspension of the qualification of "reverse invoicing" and whether and how it can be resumed, so once the recycling enterprises are suspended from the qualification of "reverse invoicing", it will be difficult for them to continue to carry out the business model based on this qualification, which will affect the continuous operation of enterprises.

Point 8: A number of policies, recycling business model adjustment needs to be considered comprehensively

In the early stage, the waste enterprises usually directly from the local operation of waste materials recycling retailers for procurement, but due to the retailer's independent tax willingness is generally low, not willing to declare tax and issue invoices, resulting in waste enterprises can not obtain legal and effective VAT input deduction and pre-tax deduction vouchers for enterprise income tax, so in practice, with the recycling enterprise first levy and then return, tax exemptions and other preferential policies evolve out of the "retailer-recycling enterprise-use enterprise" business model, through the recycling enterprise procurement of waste materials, obtain the corresponding invoices. The business model of "retailer-recycling enterprise-waste-using enterprise", waste-using enterprise purchases waste materials through recycling enterprise and obtains corresponding invoices to realize VAT input deduction and pre-tax deduction of enterprise income tax. Since the Notice on Value-added Tax Policy on Renewable Resources (Cai Shui [2008] No. 157) canceled the tax exemption policy for recycling enterprises, the recycling enterprises in the business model of "retailer-recycling enterprises-waste-using enterprises" mostly rely on the local financial refund policy to reduce the VAT input credit and enterprise income tax pre-tax deduction. The recycling enterprises in the business model of "retailer-recycling enterprise-waste enterprise" mostly rely on the local financial rebate policy to reduce the tax burden of full tax payment after invoicing to the waste enterprise, and the waste enterprise obtains the invoices to carry out the input deduction, enjoy the instant levy and instant rebate, and as the voucher for the deduction of the enterprise income tax before tax.

However, this year, the audit, tax and other departments in the form of meetings or documents clearly to strictly investigate the local investment promotion in violation of tax-related issues, Jiangxi, Shanxi, Zhejiang and other places have also carried out remedial action to clean up undue interference in the market and subsidies or rebates linked to tax revenues. The business model of recycling enterprises relying on financial rebates is facing more severe challenges, and the risk of false opening is easily transferred to enterprises using waste. In practice, there are still waste-using enterprises acquiring end-of-life products from individual households, but because of the large supply volume and the limited invoicing of each individual household, there are some non-compliant treatments.

Under Announcement No. 5, the resource comprehensive utilization enterprises with recycling business qualification (i.e. "recycling enterprises" under the provisions of Announcement No. 5) can directly purchase the end-of-life products from the sellers, and issue invoices in reverse as the VAT input credit and the pre-tax deduction vouchers for enterprise income tax, which can be used as the basis for the application of the policy of "instant levy and instant refund". The original transaction chain of "retailer-recycling enterprise-waste enterprise" is shortened to "seller-waste enterprise", which circumvents the previous practice of "recycling enterprise". It avoids the suspicion of whether the "recycling enterprise" actually participates in the business and avoids the transmission of the risk of false opening by the recycling enterprise. However, at the same time, Circular No. 5 requires enterprises applying "reverse invoicing" to handle the declaration and payment of VAT, personal income tax and other taxes on behalf of the seller, and waste-using enterprises should make adjustments to their business models in a legal and compliant manner on the basis of a comprehensive assessment of the costs and risks of different business models.