How about the reverse charge invoice scheme in recycled PET industry? –
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How about the reverse charge invoice scheme in recycled PET industry?

2024-06-17 14:05:49 CCFGroup

In Apr 2024, China's State Taxation Administration issued the "Notice on Matters Related to Reverse Charge Invoice by Resource Recycling Companies to Individuals Selling Scrap Products", specifying the specific measures and operational methods for resource recycling companies to issue reverse charge invoices to individuals selling scrap products. Starting from Apr 29th, resource recycling companies willing to reverse charge invoice can submit relevant materials to the tax authorities. Upon meeting the conditions and completing the prescribed procedures, they can promptly and conveniently implement "reverse charge."


In accordance with the "People's Republic of China Invoice Management Measures," it is stipulated that units and individuals engaged in selling goods, providing services, and conducting other business activities, when receiving payments from external business transactions, the recipient should issue an invoice to the payer; in special cases, invoices can be issued by the payers to the recipients. This "invoices issued by the payers to the recipients" is referred to as "reverse charge invoice."


Currently, resource recycling companies purchase scrap products from general taxpayers and small-scale taxpayers, and they are allowed to obtain invoices issued by the sellers according to regulations. When purchasing scrap products from individuals, individuals can also have invoices issued by the tax authorities on their behalf. In terms of the current invoice management system, it has already achieved coverage of taxpayers' compliant issuance and receipt of invoices. The introduction of "reverse charge invoice" for recycling companies this time provides them with a new option, enabling them to more conveniently obtain the "input" invoices for their purchasing operations.


Since its implementation, this policy has been in effect for nearly a month. How effective is it in the recycled PET industry? A simple survey was conducted on several domestic cleaning plants of different scales, as shown in the table below:



Statistically, currently, there are not many enterprises in the recycling industry obtaining input invoices through the reverse charge approach. During discussions, some enterprises showed little interest, considering the process to be insignificant and cumbersome. Some enterprises stated they have not thoroughly studied the policy and continue traditional operations by purchasing sources with invoices. Only a few enterprises have made preliminary attempts and are willing to increase this proportion in future business activities.


Overall, reverse charge can partially address the issue of input invoice in the recycled PET industry, providing some assistance to the industry. However, due to the short implementation time, limited understanding among enterprises, and insufficient awareness, enthusiasm is limited, and the number of participating enterprises is also small. With deepening understanding by enterprises in the future, the coverage of reverse charge in the industry will gradually increase.