Meaning
Verification process conducted by the State Taxation Administration to ensure the authenticity and legality of value added tax transactions. Tax authorities perform a specialized vat invoice audit to detect fraudulent claims, such as the issuance of invoices for transactions that never occurred. This system maintains the integrity of the tax credit mechanism by cross-referencing data between the golden tax system and corporate accounting records.
Authenticity Verification
Verification procedures occur at the national level through the electronic filing system to confirm that both the issuer and the recipient have recorded identical transaction details. During a specialized vat invoice audit, inspectors examine the physical fapiao for security features and consistent serial numbers. Discrepancies lead to the immediate suspension of the credit.
Deduction Eligibility
Qualification for input tax credits depends on the proof of a real transfer of goods or services linked to the specific document. When a company undergoes a specialized vat invoice audit, the burden of proof rests on the taxpayer to provide delivery notes and warehouse entries. Missing documentation results in the disallowance of the deduction regardless of the invoice’s physical authenticity.
Taxpayers must demonstrate that the purchased items relate directly to their business operations.
Tax Recovery
Enforcement actions follow any finding of unlawful invoice issuance or improper credit claims. Heavy fines and the requirement to repay the underpaid tax constitute the standard remedy.
