Editor's Note: It has been more than a year since the implementation of the "reverse invoicing" policy in April 2024. This year, the National Development and Reform Commission and the Ministry of Finance issued a document to explicitly accelerate the implementation of "reverse invoicing" for resource recycling enterprises to natural person sellers. Since the introduction of the "reverse invoicing" policy, tax authorities in many places have adopted many measures to further improve the tax supervision of resource recycling enterprises and natural person sellers, standardize the tax order of resource recycling industry, and better help the development of circular economy. Based on the recent tax-related trends in the field of renewable resources, this paper analyzes the tax supervision situation faced by resource recycling enterprises and natural person sellers, and prompts the key points of tax compliance for readers' reference.

I. Digital upgrade helps "reverse invoicing" tax supervision

Since the implementation of the "reverse invoicing" policy, tax authorities in many places have strengthened tax supervision on resource recycling enterprises and natural person sellers from the aspects of "reverse invoicing" qualification and business authenticity, and better played the role of "reverse invoicing" in improving the quality and efficiency of circular economy. Relevant measures are also worthy of the attention of resource recycling enterprises and natural person sellers and screening their own risks:

In the supervision of the tax compliance of "reverse invoicing" of resource recycling enterprises, many tax authorities have set up an industry supervision platform for comprehensive utilization of renewable resources to guide upstream and downstream enterprises to carry out recycling transactions through the integrated Internet of Things data cloud platform. The tax authorities can obtain real-time vouchers of resource recycling enterprises, such as purchase and sales, logistics trajectory, capital movements, etc., so as to verify the authenticity of "reverse invoicing" business and screen potential tax-related risks.

In the supervision of the tax compliance of the final settlement of natural person sellers, some local tax authorities have comprehensively sorted out the list of natural person sellers according to the prepaid ledger retained by resource recycling enterprises during "reverse invoicing", and established a "reverse invoicing" three-dimensional tracking ledger covering the basic information of natural person sellers, tax declaration status and risk monitoring, supported by big data platform, integrating the contact information of "reverse invoicing" natural person sellers, investment and business entities, etc.

With the comprehensive promotion of digital upgrading and intelligent transformation of tax collection and management, the internal and external data related to enterprise business activities are further unblocked, the tax compliance of resource recycling enterprises is facing a stricter regulatory situation, and the operating income obtained by natural person sellers is more transparent. Resource recycling enterprises and natural person sellers should pay attention to tax compliance and guard against tax-related risks.

II. Desource recycling enterprises: the "reverse invoicing" model needs to focus on controlling the authenticity of the business.

Under the "reverse invoicing" mode, one of the key points of tax compliance of resource recycling enterprises is to ensure the authenticity of the purchase business of scrapped products. Take a case as an example: Company A is a scrap chip recycling enterprise, which buys scrap chips from natural persons or other enterprises and sells them after cleaning, polishing, testing and repairing. Recently, the local tax authorities of Company A found that there were some doubts about the information of three natural person sellers submitted by Company A when they examined the application for "reverse invoicing". First, the sales of one natural person was 4.78 million yuan, which was close to the limit of "reverse invoicing" of 5 million yuan. Second, the bank cards used by the three natural person transactions were all from the same bank. Further investigation by tax officials found that the three natural persons were actually employees of Company B, the upstream supplier of Company A, and the three natural persons could not reasonably explain how to distinguish the business of the employed company from the personal business. In view of the above doubts, the tax personnel went to Company A for on-the-spot inspection, and found that Company A did not establish a ledger for purchasing waste chips. Although there was a large amount of inventory, it could not correspond to the specific source, and it could not be confirmed that the waste chips corresponding to the application for "reverse invoicing" really came from the three natural person sellers. Based on the doubts about the authenticity of the business between Company A and the three natural person sellers, the tax authorities determined that Company A did not meet the conditions of "reverse invoicing".

According to the "Measures for the Administration of Invoices" and its detailed rules for implementation, the issuance of invoices should be consistent with the actual business, including the buyer, seller, commodity name or business items and amount. From the above cases, it is not difficult to see that the tax authorities' verification of the source and quantity of scrapped products also shows that the key point of the compliance of "reverse invoicing" business lies in the consistency of "ticket" and "goods": for example, whether the natural person seller is the main seller of scrapped products, whether the amount and quantity of scrapped products sold are consistent with the information of "reverse invoicing" of resource recycling enterprises, and whether the information retained by resource recycling enterprises can prove the above situation. If the reverse invoice is inconsistent with the actual business, according to the provisions of Article 21 of the Measures for the Administration of Invoices, the resource recycling enterprise may be deemed as falsely drawn, and the reverse invoice cannot be deducted from the VAT input, which will affect the pre-tax deduction of enterprise income tax and even bring criminal liability risks of falsely drawn.

In view of the above points, under the mode of "reverse invoicing", resource recycling enterprises can control the authenticity of business and prevent the risk of false invoicing from the following three aspects: First, the object of "reverse invoicing" should be consistent with the actual transaction, based on the limit of 5 million yuan of "reverse invoicing", some natural person sellers may split their business, and the reverse invoicing of resource recycling enterprises faces the risk of "separation of tickets and goods", so resource recycling enterprises should establish relevant mechanisms to dynamically track it. Second, the amount and quantity of "reverse invoicing" should be consistent with the actual business. Resource recycling enterprises should issue invoices according to the actual acquisition situation, avoid over-invoicing or staggering, and put an end to false invoicing through fictitious business, capital return and other means. Third, the materials proving the authenticity of the business should be kept in accordance with Announcement No.5, including the purchase contract or agreement, transport invoice or voucher, goods weighing list, transfer payment record, etc., and an acquisition ledger should be established to record the time, place, seller and contact information, name, quantity and price of scrapped products in detail.

III. Natural person sellers: Pay attention to the obligation of settlement and payment of business income.

Announcement No.5 stipulates that when a resource recycling enterprise "issues reverse invoices" to natural person sellers, it shall handle the declaration of value-added tax, additional taxes and personal income tax on business income for the sellers in accordance with the regulations, and change the collection and management method of natural person sellers' self-declaration of business income into the effective collection of natural person sales of scrapped products through the way of resource recycling enterprises handling taxes and fees. During the first settlement period of natural person sellers after the introduction of the "reverse invoicing" policy, the tax authorities in many places conducted risk screening on the settlement data of natural person sellers according to the prepayment ledger retained by resource recycling enterprises during the "reverse invoicing" to urge natural person sellers to make timely settlement and pay back taxes. According to statistics, during the settlement period of business income in 2025, the tax authorities have completed the tax refund procedures for more than 170,000 taxpayers in time, and assisted more than 30,000 natural persons to complete the tax payment business, with the tax payment rate exceeding 99.5%.

Therefore, under the "reverse invoicing" mode, the operating income of natural person sellers is more transparent, and the tax authorities "trace back" the sales situation of natural person sellers through the prepayment information of resource recycling enterprises, and the tax supervision of natural person operating income is more accurate. A natural person seller shall settle the business income in a timely manner in accordance with the regulations. If the business income is not settled in accordance with the regulations, he will face the risk of being paid taxes and late fees. If he still fails to declare and pay personal income tax in time after receiving the tax notice, he may be considered as a tax evasion situation of "refusing to declare after being notified" in the first paragraph of Article 63 of the Tax Collection and Administration Law, thus facing the risk of paying taxes, late fees and fines.

In addition, at present, the State Administration of Taxation has made it clear that if complete and accurate cost information cannot be obtained and the annual taxable income cannot be calculated correctly, the natural person seller can apply the taxable income rate of 5% for verification and collection when handling the declaration of final settlement of business income. It should be noted that some natural person sellers have self-employed, so they should accurately distinguish between personal business and self-employed business when operating, and pay attention to whether they meet the applicable conditions of approved collection in the final settlement of self-employed business income. In the past practice, due to the small size and incomplete account books of some self-employed, the tax authorities in some places allowed the self-employed to apply the approved levy. However, in recent years, self-employed individuals are facing more standardized and strict tax supervision, and many documents have been issued to clarify the threshold for verification and collection, and the qualification for verification and collection of self-employed individuals has been terminated. This year, many regions have explicitly and completely abolished the verification and collection of self-employed individuals and changed to audit and collection. Self-employed individuals should pay attention to whether they meet the conditions of approved collection when judging which tax method is applicable, and at the same time, they should fully understand the caliber of local tax collection and management, so as to avoid the risk of making up taxes and charging late fees due to incorrect application.

IV. Summary

Under the background of digital upgrading and intelligent transformation of tax collection and management, tax authorities rely on tax big data to strengthen risk monitoring and early warning, and both resource recycling enterprises and natural person sellers are facing stricter tax supervision. It is the basis of "reverse invoicing" that there is a real scrap product purchase and sale transaction between the resource recycling enterprise and the natural person seller. The resource recycling enterprise should consolidate the authenticity of the business and ensure that the seller and amount of "reverse invoicing" are consistent with the actual business; Natural person sellers should pay attention to the limit of "reverse invoicing" and settle the business income in time.