Overview
The special invoice (专票) is a standardized tax document in China’s VAT system, issued exclusively by general taxpayers. It records transaction details, including product/service descriptions, quantities, prices, and tax amounts. Unlike ordinary invoices, it enables buyers to claim input tax deductions, reducing their overall tax liability. Introduced in 1994 alongside China’s VAT reform, special invoices are tightly regulated by the State Taxation Administration (STA). They incorporate anti-counterfeiting measures such as unique codes, machine-readable QR codes, and cryptographic seals to prevent fraud.
Key Features
Special invoices contain several mandatory elements: the taxpayer identification number (TIN) of both parties, invoice number, transaction date, and a breakdown of pre-tax amount, tax rate, and total payable. The document must bear the issuer’s official chop and be verified through the Golden Tax System, China’s centralized tax control platform. A key distinction from ordinary invoices is the inclusion of a ‘deduction voucher’ section, which allows recipients to scan the QR code for automated tax credit claims. The STA periodically updates invoice formats and encryption standards to enhance security and compliance.
Application Areas
Special invoices are primarily used in B2B transactions where VAT deduction is applicable, such as raw material procurement, equipment leasing, or service contracting. Export-oriented businesses also use them for tax refund claims under China’s export VAT rebate policy. In cross-border e-commerce, special invoices facilitate tax calculations for bonded imports. Government agencies and state-owned enterprises often require them for auditing purposes. Their use is prohibited in certain sectors like financial services, where simplified tax schemes apply.
Precautions
Businesses must ensure invoices are issued within 30 days of the transaction to comply with STA timelines. Errors in TINs, tax amounts, or product codes invalidate the deduction eligibility, requiring cumbersome redemptions. Lost or damaged invoices necessitate immediate reporting to the tax bureau. Taxpayers must store physical or digital copies for five years, as random audits may require submission. Severe penalties, including fines up to 500,000 RMB or criminal charges, apply for issuing fake invoices or ‘ghost invoices’ (invoices for non-existent transactions).
B2B Procurement Guide
When procuring goods/services, buyers should confirm the supplier’s general taxpayer status via the STA website before requesting special invoices. Contracts should explicitly state the requirement for 专票 and specify tax-bearing terms (e.g., ‘price includes 13% VAT’). For bulk purchases, centralized invoice management systems like SAP or local equivalents (e.g., Kingdee) can automate verification and archiving. Large enterprises often negotiate with suppliers to aggregate monthly invoices, reducing administrative workload. Digital invoices via the Golden Tax System are increasingly replacing paper versions.
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