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Invoicing in China | Are you aware of the VAT requirements?


Planning to do invoicing in China? – then you should read this!

Suppose your company or subsidiary is operating in China. In that case, you should know that invoicing is considerably different than what you are accustomed to comparing to the Western part of the world.

Is your ERP system able to comply with the legislation in a time- and cost-efficient way?

Make sure you have paid your VAT

When operating on the Chinese market, all invoices must be issued through the Golden Tax System to be valid. The reasons are that the Chinese State Taxation Administration (STA) can make sure the right amount of VAT (Value Added Tax) is being paid.

 

Invoicing in China

Before 2019, invoicing in China was difficult

Before 2019, China’s STA and the regional tax authorities had their separate version of the Golden Tax System (GTS), which did not share information. Due to this, state and local authorities were only concerned with the taxes they oversaw. The situation had the potential of creating problems for companies.

Should the Chinese tax authorities believe that you had not complied with tax legislation and not paid the right amount of VAT, it could potentially cost your company a significant amount of money in fines.

help to taxes

‘Modern China’ has simplified invoicing  

As more and more international corporations established themselves in China, it became a requirement that all invoicing could be handled smoothly.

The problem regarding the lack of information sharing was addressed in an update to the Golden Tax System in 2019.

The update combines the two different tax systems into one. Tax information between state and tax authorities is shared easier and enables companies to a greater degree to comply with China’s tax legislation nationwide and enable VAT payment.

The update of the Golden Tax System includes the following benefits:

Resources spent by your company on tax matters could be significantly reduced.
The STA can now monitor your company’s tax compliance & business status.
Increase transparency regarding tax information.
Data from various tax returns can now be easily collected & shared.
Information regarding tax offenders will be published through official media.
China’s STA’s capability to deal with tax evaders will be increased.

 

How does the Golden Tax System work?

Sales-related information, such as the sales amount, tax amount, customer information, and the nature and quantity of products/services, are automatically uploaded to the tax authorities.

When issuing invoices, the system is used, preparing, and submitting tax returns, input VAT recognition, and more.

When issuing an invoice, your company connects its terminal to the invoicing section of the GTS. For each invoice transaction your company sends, a corresponding electronic copy is sent to the STA. Ultimately, the STA can receive an invoice copy through its terminal from the company terminal and hence control the VAT.

Invoicing - VAT requirements

With the right software invoicing & VAT in China is not an issue  

The Lasernet Output Management software provided by Tabellae enables your company to receive market-leading tools to help your company with invoicing and paying VAT on the Chinese market.

Tabellae's industry-specialist knowledge has numerous benefits that will provide you with advantages when invoicing in China in your desired ERP system. The Lasernet software works as an “engine” that automatically sends the invoice from your ERP system to the Golden Tax system. The software also supports a view of Chinese characters on documents, if they are a part of the data set, we achieve from D365 or other systems. This makes it easy for you to do invoicing between China and other countries you are operating in.

With Lasernet, you are making sure that your VAT invoice is valid, and you can avoid the financial impact of not complying with Chinese tax legislation.

ISV for taxes

Sources: BDO and S.J. Grand

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Add a field and get it out on paper with the right design
Add company info
Corrections after testing
Configure automatic attachment
Encoding 1 label
Changes in design on 1 invoice (1st page different from other pages)

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About Tabellae

Tabellae is an implementation house specializing in invoices, offers and other output from business systems. We reduce the cost of document exchange and the number of unknowns in the ERP project, making the overall ERP solution easier to maintain and cheaper to upgrade as well as ensuring that it goes live on time and on budget.

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