Recently, the State Taxation Administration ("STA") has issued the Announcement on Matters Concerning Deepening the Value-added Tax Reform (the "Announcement") and the STA's General Office distributed the 2019 Work Plan on Taxpayer Services for Deepening the Valued-added Tax Reform, followed by a series of policy documents published by the STA, including the Circular on Working Effectively on the Phase I "Issuing Invoices Correctly" of Deepening the Value-added Tax Reform in 2019, the Circular on Issuing the Database (2019B Edition) of Export Rebate Rates and the Announcement on Adjusting Matters Concerning the Filing of Value-added Tax Returns. The Announcement will go into effect from April 1, 2019.
The Announcement provides clarity on taxpayers' issuing of VAT invoices during the transition phase, the one-time deduction of input VAT on real estate, documents that should be completed and submitted for enjoying the additional input VAT deduction, and other issues. Among others, the Announcement states that, where a general VAT taxpayer needs to issue a red-letter invoice due to the sales discount, sales suspension, return of goods, or other relevant reasons, to invalidate a VAT invoice it has issued at the 16-percent or 10-percent rate before this round of VAT rate adjustments are effective, the red-letter invoice shall be issued at the previous applicable VAT rate; if a wrong VAT invoice needs to be replaced by a new one, a red-letter invoice shall be issued at the previous applicable rate first, before re-issuing a correct blue-letter VAT invoice.