The year 2026 marks a watershed moment in invoice management. The Value-Added Tax Law will take effect on January 1, 2026, replacing the Provisional Regulations on Value-Added Tax, which have been in use for more than 30 years; at the same time, the rollout of fully digital electronic invoices (digital e-invoices) is entering a phase of accelerated implementation, and paper-based special VAT invoices are gradually being phased out.

For finance professionals, the change isn’t just that ”invoices no longer require a tax control device”—it’sRedesign of the Entire Voucher LogicThe

First thing: With the phase-out of paper special invoices, the invoicing system must be upgraded first.

According to industry reports, digital invoices will be fully implemented nationwide by 2026, and older versions of tax control devices will be phased out. The transition timeline may vary by region; please refer to notifications from the competent tax authorities.

Three things to complete in advance:

• Contact the invoicing system provider to confirm that the digital invoice feature has been deployed and successfully tested.
• Verify the invoice data from the old system against the data in the Electronic Tax Bureau on a line-by-line basis to ensure there are no omissions or discrepancies.
• Training on electronic invoice operations for billing clerks and accountants

The risk is clear: invoices issued using outdated equipment after the transition period may be deemed non-compliant documents, and the related expenses will not be deductible for corporate income tax purposes. This provision affects not only output invoices but also the deductibility of all your costs and expenses.

Second: The product description must match exactly; do not write ”a batch of goods” anymore.”

The ”Smart Aggregation” feature of the Golden Tax System automatically aggregates a company’s invoices, social security data, individual income tax returns, and financial statement data to generate a tax profile for the company and proactively send risk alerts.

A common trigger scenario:Discrepancies in the Item Names Between Purchases and Sales. For example, if the purchase is for ”lumber” but the sales invoice lists ”furniture,” even though they are essentially the same thing from a business perspective, the system’s product database classifies them as belonging to different categories, so the system will automatically flag them in yellow.

The solution is to require suppliers, at the procurement stage, to issue invoices accurately based on product codes and names, and to avoid accepting vague descriptions such as ”office supplies” or ”a batch of goods” simply to save time. If a tax alert has already been triggered, you will need to prepare materials such as production process descriptions to explain the situation to the tax authorities.

Third: Electronic archiving, with records retained for 10 years

Since electronic invoices do not have paper originals, the archiving method must be adjusted. Companies must archive electronic invoices electronically in accordance with tax requirements,The retention period is 10 years. Missing documentation may result in corrective actions and penalties during a tax audit.

We recommend establishing three ledgers:

• The input invoice ledger corresponds one-to-one with payment records and contracts.
• Sales Invoice Ledger, linked to revenue recognition and shipping documents
• Red-flagged and voided ledger entries: Record the reasons and approval chain

The red-hot process must also be repeated.

Taking invoices for new and used vehicle sales as an example, according to industry sources, these types of invoices have been fully digitized. Red-ink adjustments for vehicle returns must also follow the red-ink confirmation form process, and the vehicle return agreement must be uploaded; otherwise, the system will display a message indicating that the vehicle identification number (VIN) is already in use.

More commonly, cross-month returns, price allowances, and invoicing errors must all be processed through the credit memo procedure; it is no longer acceptable to privately offset them by ”issuing a negative-value invoice.”

A quick reminder

Invoices are the starting point for tax compliance and the entry point for tax audits. Digital invoices are fully traceable throughout the entire process, making the risks and costs associated with issuing fraudulent invoices, claiming fraudulent tax credits, or accepting fraudulent invoices much higher than in the past. A company’s invoices, contracts, funds, and the substance of its business must be consistent with one another.

The specific implementation timeline and operational guidelines will be subject to announcements issued by the State Taxation Administration and the competent tax authorities. Qi Cai Ying can assist enterprises with the upgrade and acceptance of their invoicing systems, as well as with the establishment of invoice ledgers and compliance audits for archiving.