How You Define VAT Invoice Types

There are two types of VAT invoices in China.

The VAT invoice types are:

• Special VAT Invoice: For business transactions, where VAT is recoverable.

• Common VAT Invoice: For transactions where VAT is not recoverable.

Before you can transfer Receivables transactions to the Golden Tax Adaptor, you must complete the setups for these processes:

• Determining the VAT invoice type to assign to Receivables transactions.

• Assigning maximum values to VAT invoice types.

Determining the VAT Invoice Type

A VAT invoice in China can have only one tax registration number and one tax rate. When you transfer Receivables transactions to the Golden Tax Adaptor, the transfer process splits any transaction with multiple tax registration numbers and tax rates into individual Golden Tax transactions (VAT child invoices).

The transfer process assigns a VAT invoice type to each Golden Tax transaction according to these settings:

• Bill-to Customer Third-Party Tax Profile: Assign a tax registration type for VAT invoices to China on the third-party tax profile of all applicable bill-to customers. The tax registration types are:

  • Small-Scale Taxpayer: Transactions assigned the Common VAT invoice type.

  • General Taxpayer: Transactions assigned the Special VAT invoice type.

  Note: This setting is required to transfer Receivables transactions to the Golden Tax Adaptor. Transactions without a tax registration type assigned to the bill-to customer are ignored during the transfer process.

• Document Fiscal Classification on the transaction: Optionally assign a document fiscal classification of Special VAT Invoice or Common VAT Invoice to transactions.

  If the tax registration type of the bill-to customer is Small-Scale Taxpayer, the document fiscal classification setting is ignored and the transaction is assigned the Common VAT invoice type.

  If the tax registration type of the bill-to customer is General Taxpayer, the transaction is assigned the Special VAT invoice type, unless the document fiscal classification setting is Common VAT Invoice. If so, then the transaction is assigned the Common VAT invoice type.

Assigning Maximum Values

The Chinese tax authority specifies for each business establishment the maximum amount and maximum number of lines allowed on a VAT invoice. You assign these maximum values in the VAT-related system options for each legal reporting unit that issues VAT invoices in China.

For each combination of tax registration number of the legal reporting unit and VAT invoice type, designate the maximum amount and maximum number of lines. After splitting transactions by tax registration number and tax rate, the transfer process further splits transactions according to the values you assign here.

The value in the Maximum Invoice Amount field is in the Chinese currency. The transfer process converts transaction amounts in any other currency to the Chinese currency before transfer to the Golden Tax Adaptor. The maximum amount limit is applied to the converted amount.