Recently, State Taxation Administration of The People's Republic of China issued the Announcement on Issues Concerning the Recognition and Handling of Special VAT Invoices Issued by Enterprises with Lost Industries (State Taxation Administration of The People's Republic of China Announcement No.76, No.2016), stipulating that general VAT taxpayers who obtain abnormal special VAT invoices issued by enterprises with lost industries shall not deduct input tax or declare export tax rebates.

Because this policy has a "tax chain effect", enterprises may not be at fault, but they need to bear the price of additional taxes.

Therefore, when considering the impact of the publication of this document on enterprises, not only are enterprises not allowed to deduct VAT or apply for export tax rebate, but the deeper impact is that enterprises need to actively adjust the control of supply chain to avoid the extra tax burden brought by the enterprise's own fault-free "tax union".