Editor's Note: Due to the lack of invoices at the source, the problem of pre-tax deduction of enterprise income tax vouchers in the renewable resources recycling sector has existed for a long time, and the homemade vouchers have become a “stopgap measure” for most of the resource recycling enterprises to solve the voucher problem in practice. In recent years, especially since last year, the “reverse invoicing” policy has been formally implemented, the tax risk of resource recycling enterprises with homemade vouchers gradually appeared, and many enterprises are faced with the problem of adjusting and paying the enterprise income tax, and charging late fees. This paper takes the predicament of invoices at source in the renewable resources industry as the entry point, based on the actual situation of the industry, combs through the policies and measures related to the pre-tax deduction of vouchers for enterprise income tax, and analyzes the legitimacy and reasonableness of the homemade vouchers of the resource recycling enterprises for the readers' reference.

I. The industry tax dilemma: resource recycling enterprises are unable to obtain the objective obstacles of invoices

Waste materials mainly from the residents of daily life waste and production waste, life waste volume is low, residents in the generation of waste materials, often by scavengers, small scrap recycling stations and other retailers to be recycled into the recycling market, the source of waste production residents usually do not issue invoices; and account for a large proportion of the source of waste for the production of waste to China's largest recycled product categories of scrap steel, for example, scrap steel The main sources of scrap steel are depreciation of machinery, depreciation of scrap steel generated by building dismantling and processing scrap steel generated by machinery manufacturing, automobile manufacturing and other industries. According to the relevant provisions of the tax law, as a general taxpayer, the sale of waste enterprises need to pay enterprise income tax and 13% of the value-added tax, and usually there is no corresponding cost of value-added tax input deduction and income tax deduction, resulting in the sale of waste materials itself higher taxes. Therefore, in practice, most of the waste enterprises in the sale of waste materials in the lack of enthusiasm to declare tax, coupled with most of the waste materials acquisition of low entry thresholds, many streets and alleys of the natural person of the retailer to become the main force of the acquisition of waste materials, which led to the production of a large number of waste materials to the field of off-the-books in the form of sales of non-ticket inflow into the hands of the retailer.

Whether it is living waste or production waste, the invoice chain of the renewable resources industry has been broken at the source of waste supply, and the waste materials are collected in the form of non-invoiced to many natural persons in the form of retailers, who are confined to the heavy tax burden, low tax awareness and other reasons, and are usually negligent in the sale of the waste materials they acquire to the resource recycling enterprises on behalf of invoices, which results in the resource recycling enterprises wanting to obtain invoices can not get, and face the inability to make As a result, resource recycling enterprises cannot obtain invoices even if they want to, facing the predicament of not being able to carry out VAT input deduction and EIT deduction. At the income tax level, if the resource recycling enterprises are not able to deduct the cost of acquiring waste materials before tax due to the lack of invoices, the full payment of enterprise income tax will make the original profit margins are extremely low enterprises face the predicament of losses. Therefore, the lack of invoices at source is a long-term and fundamental tax dilemma in the renewable resources industry, and it is a reality that is difficult for resource recycling enterprises to confront and change.

II. Practice exploration: self-made vouchers, approved levy and other ways to deal with the pre-tax deduction voucher problem in renewable resources industry

Based on the industry-based pre-tax deduction vouchers for enterprise income tax problems, although the tax policy provides for natural person invoicing and other universal path, but the invoicing is difficult to effectively land in the renewable resources industry, over the years on the renewable resources industry tax policy has not been an effective response to the pre-tax deduction vouchers for resource recycling enterprise income tax issues: in 1994, “the Ministry of Finance and the State Administration of Taxation on the Transportation Expenses and In 1994, the Ministry of Finance and the State Administration of Taxation on the transport costs and waste materials are allowed to deduct input tax issues notice (Cai Shui Zi [1994] No. 12, has been repealed) provides that the waste materials recycling business units to the residents of the individual acquisition of waste materials can be issued by the tax authorities supervised by the “acquisition vouchers” as financial vouchers, but the “State Administration of Taxation on the strengthening of the value-added tax on waste materials However, the Circular of the State Administration of Taxation on Strengthening Value-added Tax on Waste Materials (State Taxation Letter [2005] No. 544, repealed) further clarifies the requirements for the issuance of “acquisition vouchers”, and stipulates that the recycling unit can only issue acquisition vouchers for urban and rural residents (excluding individual operators) and non-operating units when acquiring waste materials and shall not be used for the acquisition of waste materials in other places. The “purchase voucher” is not applicable to the recovery of most of the productive waste materials when they are purchased from other places. After the repeal of the above policy, basically no similar policy has been issued to solve the issue of pre-tax deduction vouchers for enterprise income tax in the field of renewable resources. Although the Announcement on Improving the VAT Policy on Comprehensive Utilization of Resources (Announcement of the Ministry of Finance and the State Administration of Taxation No. 40 of 2021), which was issued in 2021, clarified that the resource recycling enterprises can apply simplified taxation to reduce the burden of value-added tax, it has not proposed a solution to the issue of pre-tax deduction vouchers for enterprise income tax. The issue of vouchers has not been addressed.

Therefore, before the tax policy makes an effective response to the issue of pre-tax deduction vouchers for enterprise income tax in the recycling of renewable resources, resource recycling enterprises in practice try to solve the problem of enterprise income tax deduction brought about by not obtaining invoices through a number of methods: firstly, some enterprises bear the VAT burden of paying the full amount of output tax or choose the simplified VAT, and use the homemade vouchers and supporting payment vouchers for the procurement of waste materials for the purpose of enterprise income tax. Vouchers and supporting payment vouchers, pound sheets and other business information into the accounts, some local tax authorities, taking into account the actual situation of the renewable resources recycling industry and encourage the development of the circular economy, the initial intention of such treatment is also recognized; Secondly, some local tax authorities along the lines of Cai Shui Zi [1994] No. 12, allowing enterprises to purchase agricultural products invoice end of the invoice issued by the category for the purchase of agricultural and sideline products, but the ticket does not show the “agricultural products” on the face of the invoice, but it does not show the “agricultural products” on the face of the invoice. Some local tax authorities follow the idea of Cai Shui Zi [1994] No.12 to allow enterprises to issue purchase invoices of agricultural products with the invoice category of agricultural and sideline products purchase, but the purchase invoices without the words “purchase of agricultural products” on the face of the invoices to be used as the vouchers for deduction of pre-tax enterprise income tax.

All of the above treatments inevitably have compliance risks, but the emergence of these practical operations also maps out the objective existence of the source invoicing problem in the renewable resources industry, and is also a way out to maintain the survival and development of the industry's enterprises in the event that the tax policy cannot effectively respond to the practical difficulties, which is reasonable to a certain extent.2024 In April 2024, the “State Administration of Taxation's Report on the Sellers of Resource Recycling Products by Resource Recycling Enterprises to Natural Persons with Scrap Products” was published. Announcement on Matters Relating to “Reverse Invoicing” (SAT Announcement No. 5 of 2024) was issued, clarifying that if a natural person seller of end-of-life products sells end-of-life products to a resource recycling enterprise, the eligible resource recycling enterprise can issue an invoice to the seller, and the invoice issued in the reverse direction can be used as a pre-tax deduction voucher for resource recycling enterprises' income tax, giving the resource recycling enterprise a Reverse invoices can be used as pre-tax deduction vouchers for resource recycling enterprises, giving resource recycling enterprises a solution to the problem of pre-tax deduction vouchers for enterprise income tax. It is easy to see that the “reverse invoicing” policy responds to the lack of invoices at source in the renewable resources industry - resource recycling enterprises have difficulties in obtaining invoices from natural persons, and they need to obtain the invoices required for pre-tax deduction of enterprise income tax by means of reverse invoicing. invoice. Therefore, based on the aforementioned objective situation of the industry, it is reasonable and justified for resource recycling enterprises to use homemade vouchers to solve the problem of vouchers for pre-tax deduction of enterprise income tax.

III. The treatment of resource recovery enterprise income tax should take into account the actual situation of the industry and avoid “one-size-fits-all” law enforcement.

The Enterprise Income Tax Law has set the substantive requirements of “authenticity”, “relevance” and “reasonableness” for pre-tax deduction, but there are many disputes in practice as to whether the invoice is the only voucher for pre-tax deduction of enterprise income tax. The sole voucher is quite controversial in practice. After the issuance of Measures for the Administration of Vouchers for Pre-tax Deduction of Enterprise Income Tax in 2018 (State Administration of Taxation Announcement No. 28 of 2018), quite a number of local tax authorities, relying on the provisions of Announcement No. 28, considered that resource recycling enterprises should use invoices as the vouchers for pre-tax expenses, and required the resource recycling enterprises which were accounted for by homemade vouchers to make up for the invoices, and if they failed to make up for the invoices in accordance with the provisions, the corresponding expenditures were not permitted for pre-tax deductions, and adjustments are made to the retroactive payment of enterprise income tax and late fees are added. We are of the view that, based on the aforementioned special characteristics and practices of the renewable resources industry, it is reasonable for resource recycling enterprises with real acquisition business but unable to obtain invoices to use homemade vouchers as the basis for pre-tax deduction for enterprise income tax, which is in line with the provisions of the Enterprise Income Tax Law on the expensing of costs, and the deduction should be allowed. Requiring resource recycling enterprises to account for pre-tax deduction with invoices is essentially transferring the problem of broken invoice chain at the source of supplying waste to the recycling link, and imposing a formal compliance obligation on resource recycling enterprises. In addition, from the point of view of tax adjustment, in the case that the enterprise has no tax evasion intention and has real expenditure, if the enterprise is not allowed to make pre-tax deduction and tax adjustment and cost reduction, it is taxing the non-existent “income”, which is not in line with the principle of enterprise income tax, and it is detrimental to the legitimate rights and interests of the enterprise.

From another point of view, it is also difficult to effectively implement Circular 28 in the field of recycling of renewable resources, which is generally applicable to enterprises in all industries, and is a means to improve the efficiency of tax collection and management under the idea of “controlling tax by invoices”, and the premise for its policy effect is that there is no objective obstacle for enterprises to obtain invoices after the occurrence of taxable behaviors. However, in the case of broken invoice chain in the recycling of renewable resources, the resource recycling enterprises want to obtain invoices but can not, if the provisions of Notice No. 28 still rigidly require the resource recycling enterprises to invoice for pre-tax deduction of income tax, not only can't realize the original intention of the policy, but also will lead to the survival of resource recycling enterprises due to the policy into a predicament. Therefore, the landing of the policy should take into account the actual situation of the industry, and the treatment of the vouchers for pre-tax deduction of income tax for resource recycling enterprises should be based on the long-standing tax problems in the renewable resources industry, so as to avoid “one-size-fits-all” law enforcement that leads to the deviation of the implementation effect from the policy's original intent and the damage to the legitimate rights and interests of the taxpayers.

Summary

At the beginning of this year, the National Development and Reform Commission and the Ministry of Finance issued the “Notice on the 2025 Enhanced Expansion of the Implementation of Large-scale Equipment Renewal and Consumer Goods Trade-in Policies” (Development and Reform of Environment and Resources [2025] No. 13), deploying the new year's “two new” policies, which explicitly proposed to accelerate the implementation of the resource recycling enterprises to the natural person end-of-life It is clearly proposed to accelerate the implementation of “reverse invoicing” by resource recycling enterprises to natural persons who sell end-of-life products, and to standardize the tax order of resource recycling and utilization industry. Under the background of “reverse invoicing” vigorously implemented, the tax risk of resource recycling enterprises with homemade vouchers is more prominent, enterprises should pay attention to the caliber of local law enforcement, timely adjust the business model and the management of vouchers for deduction of pre-tax enterprise income tax; for the previous years, enterprises with homemade vouchers or approved levies for enterprise income tax are facing the risk of tax adjustments. For the tax adjustments in previous years, the resource recovery enterprises should communicate with the tax authorities in a timely manner, and fully explain the business authenticity, industry specificity, reasonableness and legitimacy of financial and tax treatments in order to strive for a favorable outcome.