Guidelines for Issuing Individual Service Remuneration Invoices

Many enterprises routinely engage natural persons to provide independent services such as design, lecturing, consulting, performances, and technical services in the course of their daily operations. Under applicable laws and regulations, where an individual provides services exceeding the VAT threshold prescribed under relevant policies, such individual is required to issue an invoice as a corporate bookkeeping voucher. The mere fact that the enterprise has withheld and paid individual income tax (IIT) on behalf of the service provider does not obviate the need for an invoice. Enterprises should also duly notify service providers of their obligation to furnish lawful invoices to ensure compliant bookkeeping. Kaizen has summarized the key policy points below for clients’ reference.

1. Analysis of Core Obligations
   
   In day-to-day operations, enterprises frequently engage natural persons to provide ad hoc services. Generally, with respect to such services, enterprises should be mindful of the following:
   

   (1)	A natural person providing paid services exceeding the VAT threshold is obligated to issue an invoice;
   (2)	When paying service remuneration, the enterprise is obligated to withhold and remit IIT on behalf of the service provider.

   
   In summary, the enterprise’s withholding and remittance of IIT does not relieve the natural person of the obligation to issue an invoice. The two obligations are independent tax compliance requirements. In the absence of an invoice, the enterprise’s related expenses will not be deductible for corporate income tax purposes.
   
   
2. Scope of Application for Service Remuneration Invoices
   
   Where a natural person, acting independently and not under an employment relationship, derives income from non-employment services, and such income exceeds the applicable VAT threshold, a service remuneration invoice is required. The scope of application includes, but is not limited to, ad hoc or one-off services such as design, decoration, consulting, lecturing, translation, technical services, performance, and market research.
   
   
3. VAT Threshold for Individual Service Remuneration
   
   From January 1, 2026, to December 31, 2027, small-scale taxpayers (including natural persons) providing service remuneration are subject to the following VAT thresholds:
   

   (1)	Where the taxable period is one month, the threshold is monthly sales of RMB 100,000; where the taxable period is one quarter, the threshold is quarterly sales of RMB 300,000.
   (2)	Where tax is paid on a per-transaction basis, the threshold is sales of RMB 1,000 per transaction (per day). Where multiple taxable transactions occur within a single day, the threshold applies on a daily basis.

   
   
4. Procedure for Employers to Initiate a Service Remuneration Invoice Application
   
   At present, invoices for natural person service remuneration may be initiated by the employing entity and confirmed by the individual. The procedure for an employer to initiate a service remuneration invoice application is as follows:
   
   

   (1)	The enterprise’s tax handling personnel log in to the Natural Person Electronic Tax Authority Web portal;
   (2)	Select [Corporate Tax Filing] to access the withholding function;
   (3)	Go to [Personnel Information Collection] to add the applicant for invoice issuance (sequentially enter name, ID number, contact number, address, bank name, bank account number, etc.; name and ID number are mandatory);
   (4)	Sequentially click [Withholding Filing] → [Individual Invoice Issuance] → [Initiate Invoice Issuance (Service Remuneration)] → [Initiate Application];
   (5)	Fill in invoice element information: seller information, buyer information, service item information, taxable conduct information, etc.;
   (6)	Click [Submit] to proceed to the confirmation page; after verifying the information, click [Confirm and Submit] to complete the submission;
   (7)	Notify the invoice applicant to log in to the Individual Income Tax APP to confirm.

   
   

Kaizen Reminders:

To assist enterprises in effectively mitigating tax risks, Kaizen’s tax team highlights the following key points:

(1)	Under tax laws, service remuneration income that constitutes a one-off payment is treated as a single occurrence; income from continuous services under the same project is treated as a single occurrence for each calendar month. Therefore, enterprises should pay particular attention: if a natural person provides the same type of service multiple times within a single month, the cumulative monthly income must be assessed against the threshold, rather than each individual transaction.
(2)	Enterprises must strictly distinguish between service remuneration and salary/wages. Service remuneration requires both “independent” and “non-employment” conditions. If an individual has entered into an employment contract with the enterprise, participates in social insurance, is subject to daily attendance management, or there exists a de facto employment relationship, the income constitutes salary/wages and does not require an invoice.
(3)	With the rollout of fully digital electronic invoices (“e-invoices”) and the deeper application of the Golden Tax System Phase IV, tax authorities have significantly enhanced their ability to cross-compare invoice flows, fund flows, and contract flows. Historically covert practices such as booking expenses without invoices (“white slips”) or using substitute invoices to pad expenses will be rendered transparent under data comparison.

Special Risk Warning: Using irrelevant invoices (i.e., invoices that do not correspond to actual business operations) as substitutes for service remuneration invoices constitutes suspected issuance of false invoices, violating Article 21 of the Measures for the Administration of Invoices. Both enterprises and individuals may face administrative penalties or even criminal liability.

KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advice and services in respect of the formation and registration of company, application for various business licenses and permits, any compliance, tax planning, audit, and accounting in China. Please call and talk to our professional consultants for details.

Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.

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