What is the Electronic Invoice Warning System?

This is a tool developed by the tax authority that uses big data and intelligent algorithms to analyze the buying and selling of goods and services through electronic invoices. The system will compare the business’s data with established criteria to detect anomalies, thereby issuing warnings.

Who is typically warned?

Businesses and households registered to use electronic invoices, especially those with sales values exceeding purchase values, are often monitored by the system. Common anomalies include:

• Selling goods without inventory: The business issues invoices for a large quantity of goods but does not have sufficient goods to prove it.
• Invoice values significantly higher than actual: The business declares a higher value for goods than the market value or purchase value.
• Issuing invoices for unregistered business lines: The business issues invoices for goods or services that are not within its registered business lines.

Why is a business warned?

The warning system is designed to detect tax evasion activities such as:

• Issuing fake invoices: Creating fake invoices to evade taxes.
• Legalizing illegal transactions: Using invoices to conceal illegal sources of income.
• Incorrect declaration: Incorrectly declaring information on invoices to reduce the amount of tax payable.

What will the tax authority do when a business is warned?

When the system detects a business with anomalies, the tax authority will conduct inspections and audits to verify the information. Specific measures may include:

• Request for explanation: The business will be required to provide documents and evidence to explain the suspected transactions.
• On-site inspection: Tax officials will visit the business to inspect goods, books, invoices, etc.
• Suspension of invoice use: In case of serious violations, the tax authority may decide to suspend the business’s use of invoices.

What should businesses do to avoid warnings?

To avoid being warned by the system and unnecessary trouble, businesses should:

• Update accurate information: Ensure that the business registration information, business lines, address, etc., on the tax system is always accurate.
• Manage inventory closely: Keep inventory data consistent with reality.
• Issue invoices correctly: Strictly comply with electronic invoice regulations.
• Keep complete records: Keep all transaction-related documents for inspection and audit purposes when needed.

Conclusion

The electronic invoice warning system is a useful tool to help the tax authority detect and prevent tax evasion. Businesses need to enhance their awareness of compliance, build a robust management system to avoid being affected by this system.