Pre-tax deduction vouchers for corporate income tax are divided into two categories:
Whether an expense is subject to value-added tax determines whether external or internal documentation is required.For taxable items, invoices should generally be used as deduction vouchers.; For items that are not subject to tax, other external or internal supporting documents may be used.
This dividing line is the starting point for all determinations. Many disputes over ”unrecorded expenses” essentially stem from a lack of clarity regarding whether the expenditure in question is a taxable item.
向Individuals who have not registered for tax purposesSmall, miscellaneous expenses may be deducted based on payment receipts and internal documentation. Payment receipts typically must include information such as the recipient’s name, ID number, expense category, and amount received.
“There are clear criteria for what constitutes ”small and incidental” amounts,Subject to current policy provisions. For amounts exceeding the threshold, even if the other party is an individual, you should obtain an invoice issued by the tax authorities on their behalf.
This exception is frequently abused: splitting business expenses that should be supported by invoices into multiple small-amount transactions is a classic example of non-compliance and is easily detected through data comparisons under the "Golden Tax Phase IV" system.
It must be made clear that purchasing tickets and issuing fraudulent invoices are red lines and are not options. Under the Golden Tax Phase IV system, the correspondence between the descriptions and amounts of purchases and sales, as well as logistics and cash flows, will be cross-checked, posing a very high risk.
We recommend creating a ”Voucher Requirements Table” organized by expense type: which expenses require a special invoice, which can be covered by a standard invoice, which can be documented with an internal voucher, and which fall under exceptional circumstances. Having this table implemented during the procurement and reimbursement processes is far more effective than having the finance department review each transaction individually after the fact.
If you discover that some expenses lack valid supporting documents before the annual tax settlement, you should issue or replace them within the specified time limit; if it is truly impossible to issue them, handle the matter in accordance with regulations—do not fabricate documents.
Before the annual tax settlement, it is recommended to conduct a dedicated review of your accounting documents: List, item by item, all expenses for the current period that have been included in costs but lack compliant supporting documents. For those that can be reissued, do so as soon as possible; for those that truly cannot be obtained, handle them in accordance with regulations. It is much less stressful to carry out this task during the year-end closing process than to wait until the week before the annual tax settlement deadline.
It is also important to distinguish between two concepts: “not tax-deductible” and “not recordable in the books” are two separate matters. Expenses for which compliant supporting documents are missing should still be accurately recorded in the books as they actually occurred; however, they should be adjusted upward for tax purposes when calculating taxable income. If such expenses are not recorded simply because an invoice cannot be obtained, this will result in discrepancies between the books and actual inventory, which in turn will create even greater compliance risks.
Qicaiying can assist companies in organizing their system of pre-tax deduction vouchers and designing compliant processes for cross-border procurement; specific policies are subject to current regulations.