State Administration of Taxation issues announcement, clarifying matters related to individual income tax management.

The State Administration of Taxation has issued an announcement regarding the management of individual income tax. Starting from July 1, 2026, individuals who sell scrap products to recycling enterprises through the "three-stream integration reverse invoicing" will have a reduced prepayment of 0.25% on their annual sales revenue (excluding value-added tax) if it does not exceed 600,000 RMB, while the portion exceeding 600,000 RMB will still be subject to a 0.5% prepayment on operating income tax. Other services and management provisions will be implemented in accordance with the announcement on "reverse invoicing" issued to individuals who sell scrap products to resource recycling enterprises by the State Administration of Taxation (No. 5 of 2024). The original text is as follows: Announcement of the State Administration of Taxation on Matters Related to the Management of Individual Income Tax State Administration of Taxation Announcement No. 12 of 2026 In order to further implement the "Notice of the State Council on Printing and Issuing the Action Plan for Promoting Large-scale Equipment Renewal and Old-for-New Exchange of Consumer Goods" (Guofa [2024] No. 7) and the announcement on continuing to implement the personal income tax policies supporting residents in buying new homes issued by the Ministry of Finance, the State Administration of Taxation, the Ministry of Housing and Urban-Rural Development (No. 3 of 2026), the relevant management matters are hereby announced as follows: 1. Starting from July 1, 2026, individuals who sell scrap products to recycling enterprises through the "three-stream integration reverse invoicing" will have a reduced prepayment of 0.25% on their annual sales revenue (excluding value-added tax) if it does not exceed 600,000 RMB, while the portion exceeding 600,000 RMB will still be subject to a 0.5% prepayment on operating income tax. Other services and management provisions will be implemented in accordance with the announcement on "reverse invoicing" issued to individuals who sell scrap products to resource recycling enterprises by the State Administration of Taxation (No. 5 of 2024). 2. In accordance with the announcement on continuing to implement the personal income tax policies supporting residents in buying new homes issued by the Ministry of Finance, the State Administration of Taxation, the Ministry of Housing and Urban-Rural Development (No. 3 of 2026), during the period from January 1, 2026, to December 31, 2027, taxpayers who sell their own homes and repurchase a new home in the same city within 1 year after selling their current home are eligible to apply for a refund of the personal income tax paid on the sale of their current home, subject to the provisions of the announcement on the relevant management matters of the personal income tax policies supporting residents in buying new homes issued by the State Administration of Taxation (No. 21 of 2022). This announcement is hereby made. State Administration of Taxation May 29, 2026 The Announcement of the State Administration of Taxation on Matters Related to the Management of Individual Income Tax Interpretation 1. Why adjust the prepayment rate of individual income tax on operating income using the "three-stream integration reverse invoicing"? The "three-stream integration reverse invoicing" mainly refers to embedding tax rules into online payment platforms, directly connecting waste recycling activity information, and enabling resource recycling enterprises to initiate payment to individuals who sell scrap products (hereinafter referred to as natural person sellers) on online payment platforms. The system automatically calculates the tax payable by the natural person seller, withholds and pre-fills the invoice, achieving the integration of payment invoice flow, people-enterprise flow, and fund flow, so as to achieve the realization of "payment invoice, invoicing tax, tax payment, tax payment entry." This model has the advantage of not requiring resource recycling enterprises to handle declarations on behalf of natural person sellers the following month, without having to establish various proof businesses independently to verify the authenticity of purchases, and the process is more standardized. For natural person sellers, it also has the advantage of invoicing tax payment, reduced tax risks, etc. To encourage more recycling enterprises and natural person sellers to choose the "three-stream integration reverse invoicing" model and taking into account the technical advantage of real-time accumulation of sales revenue using the "three-stream integration reverse invoicing", we have appropriately reduced the prepayment rate of individual income tax on operating income using this model. 2. How is the prepayment rate of individual income tax on operating income adjusted in this announcement? According to the provisions of this announcement, starting from July 1, 2026, natural person sellers who sell scrap products purchased by recycling enterprises through the "three-stream integration reverse invoicing" will have a reduced prepayment of 0.25% on their annual sales revenue (excluding value-added tax) if it does not exceed 600,000 RMB, while the portion exceeding 600,000 RMB will still be subject to a 0.5% prepayment on operating income tax. At the same time, natural person sellers who sell scrap products by "reverse invoicing" through other methods will still be subject to a 0.5% prepayment on operating income tax based on the sales revenue. For example, on November 25, 2026, seller Li first sold scrap products purchased from recycling enterprise A through "three-stream integration reverse invoicing" for 300,000 RMB. From July 1, 2026, to the time of this sale, Li had already sold 400,000 RMB through "three-stream integration reverse invoicing" to another recycling enterprise B, and prepaid taxes of 40 x 0.25% = 0.1 RMB. Therefore, the tax to be prepaid for this "three-stream integration reverse invoicing" is: (60-40) x 0.25% + (30+40-60) x 0.5% = 0.1 RMB 3. Do natural person sellers who acquire income through "three-stream integration reverse invoicing" need to settle corporate income tax? In accordance with the provisions of this announcement, except for the difference in the prepayment rate, other services and management provisions will be implemented in accordance with the announcement on the matters related to "reverse invoicing" issued to individuals who sell scrap products to resource recycling enterprises by the State Administration of Taxation (No. 5 of 2024). Therefore, by the following March 31 after the "reverse invoicing", the seller should independently settle the corporate income tax with the competent tax authority in the place of business management. Taking Li as an example again, when processing the corporate income tax settlement the following year, if there is no other income from "reverse invoicing" that year and no other income from operating activities, and proper, accurate cost expense data cannot be obtained to correctly calculate the annual taxable income, the tax authority will calculate and collect the tax based on a 5% income tax rate and applicable tax rates ranging from 5% to 35%, resulting in a total tax payable for the year of: (40+30) x 5% x 10% - 0.15 = 0.2 RMB. Since the prepaid tax is the same as the total tax payable for the year, there is no need for refund or additional payment for tax settlement. 4. What preparations do recycling enterprises need to make if they want to use "three-stream integration reverse invoicing"? Recycling enterprises that want to use "three-stream integration reverse invoicing" need to do the following preparations: (1) Choose the appropriate payment platform (such as UnionPay Business, WeChat, Alipay, China Merchants Bank, Industrial and Commercial Bank of China, etc.) and open the relevant account. (2) The payment platform invites the recycling enterprise to use it as a unit through the electronic tax bureau, and the recycling enterprise confirms and agrees through the electronic tax bureau. (3) According to the business needs of the recycling enterprise, the payment platform organizes interface development and function integration. (4) After the function integration is completed, the "three-stream integration reverse invoicing" can be automatically triggered when the recycling enterprise makes online payments. 5. How do natural person sellers operate when using "three-stream integration reverse invoicing" with recycling enterprises? The operation process for natural person sellers on various payment platforms when using "three-stream integration reverse invoicing" with recycling enterprises may vary slightly. Taking Alipay platform as an example, the specific process is as follows: (1) After purchasing scrap from natural person sellers, the recycling enterprise enters the transaction information such as goods name, unit price, weight, etc. The platform automatically calculates the payment amount, pre-fills the invoice, and generates information on pending tax fees. (2) The recycling enterprise shows the "payment code" to the natural person seller. (3) The natural person seller scans the code to pay the tax and deposit it into the account, with the payment automatically transferring to the natural person's account and the invoice automatically issued and uploaded. 6. Have there been any adjustments to the personal income tax policies supporting residents in buying new homes? According to the announcement on continuing to implement the personal income tax policies supporting residents in buying new homes issued by the Ministry of Finance, the State Administration of Taxation, the Ministry of Housing and Urban-Rural Development (No. 3 of 2026), the personal income tax policies supporting residents in buying new homes will be continued until December 31, 2027. The specific provisions and declaration procedures will continue to be based on the previous regulations, and eligible taxpayers should refer to the announcement on the management matters of the personal income tax policies supporting residents in buying new homes issued by the State Administration of Taxation (No. 21 of 2022). This article is a selection from the official website of the State Administration of Taxation; edited by GMTEight: Li Fo.