Voluntary e-invoicing soon to be possible across China

China’s State Taxation Administration (STA) has announced the nationwide rollout of optional digital electronic invoices starting December 2024, granting them the same legal validity as paper invoices. Covering various categories like VAT invoices and transport tickets, these digital invoices will feature unique 20-digit identification numbers and essential transaction details.

The State Taxation Administration (STA) of China has officially announced the promotion of optional digital electronic invoices across the country, starting in early December 2024. This decision marks a significant shift in invoicing practices, as digital invoices will now hold the same legal validity as traditional paper invoices.

Digital invoices will encompass several categories, including:

• VAT special invoices
• Ordinary invoices
• Air transport electronic passenger ticket itineraries
• Railway electronic passenger tickets
• Motor vehicle sales unified invoices
• Second-hand car sales unified invoices

These digital invoices will contain essential information such as the invoice name, number, date, purchaser and seller details, unit, quantity, unit price, total amount, tax rate, and tax amount.

Each digital invoice will have a unique 20-digit number structured as follows:

• The 1^st and 2^nd digits represent the last two digits of the calendar year.
• The 3^rd and 4^th digits indicate the regional code of the provincial tax bureau.
• The 5^th digit reflects the issuing channel.
• The 6^th to 20^th digits are sequential codes.

The STA plans to establish a regulatory framework and a unified national electronic invoice service platform to facilitate the issuance of these digital invoices. Tax authorities will manage the total invoice quota for each taxpayer through this platform, adjusting it based on various factors such as tax risk levels and business conditions.

While the issuance of digital invoices remains optional for taxpayers at this stage, this announcement signifies the conclusion of a previous pilot project and represents a major advancement toward fully integrating electronic invoicing into China’s tax system. This transition is expected to enhance operational efficiency for taxpayers and support broader digital transformation initiatives within the economy.