With Notice Shui Zong Han [2016] No. 455, the State Administration of Taxation (“SAT”) launches a special inspection on how taxpayers have been using VAT invoices since the VAT Reform was fully implemented on May 1, 2016. 

The special inspection includes:

  • VAT invoices issued by taxpayers, focusing on taxpayers in the general consumer service industry and the commercial retail industry; and 
  • VAT invoices issued, distributed and cancelled by the state tax authorities on behalf of taxpayers. 

The provincial state tax authorities will conduct inspections in the provinces until October 20, 2016, and, based on these results, the SAT will conduct further selective inspections until November 20, 2016. 

After analyzing all results, the SAT will notify taxpayers before November 30, 2016, of any issues identified during the special inspection.