In order to further implement the Notice of the State Council on Issuing the Action Plan for Promoting Large-Scale Equipment Renewal and Consumer Goods Trade-in (Guo Fa [2024] No. 7) and the Announcement of the Ministry of Finance, the State Taxation Administration and the Ministry of Housing and Urban-Rural Development on Continuing to Implement Individual Income Tax Policies Supporting Residents' Home Purchase Trade-in (2026 No. 3), the relevant tax withholding and administration matters are hereby announced as follows:

I. From July 1, 2026, natural persons selling scrap products through "three-stream integration reverse invoicing" to resource recycling enterprises, for the portion of the annual sales amount (excluding VAT) under the "three-stream integration reverse invoicing" not exceeding RMB 600,000, shall be subject to a 0.25% prepaid individual income tax rate; the portion exceeding RMB 600,000 shall still be subject to a 0.5% prepaid individual income tax rate. Other services and tax withholding administration shall be implemented in accordance with the Announcement of the State Taxation Administration on Relevant Matters Concerning the "Reverse Invoicing" of Natural Persons Selling Scrap Products to Resource Recycling Enterprises (2024 No. 5).

II. According to the provisions of the Announcement of the Ministry of Finance, the State Taxation Administration and the Ministry of Housing and Urban-Rural Development on Continuing to Implement Individual Income Tax Policies Supporting Residents' Home Purchase Trade-in (2026 No. 3), during the period from January 1, 2026 to December 31, 2027, if a taxpayer sells their own home and purchases another home in the same city within one year after selling the existing home, they may apply, in accordance with the rules, for a refund of the individual income tax already paid on the sale of the existing home. Specific service and tax withholding administration shall be implemented with reference to the Announcement of the State Taxation Administration on Relevant Tax Withholding Matters Concerning Individual Income Tax Policies Supporting Residents' Home Purchase Trade-in (2022 No. 21).

This is hereby announced.

State Taxation Administration

May 29, 2026

I. Why is the prepaid individual income tax rate for income earned under "three-stream integration reverse invoicing" adjusted?

"Three-stream integration reverse invoicing" mainly refers to embedding tax rules into online payment platforms and linking scrap recycling activity information. When a resource recycling enterprise initiates payment on an online payment platform to a natural person seller of scrap products (hereinafter referred to as the natural person seller), the system automatically completes the calculation of the natural person seller’s tax payable, deduction and warehousing, and pre-filling of invoices, achieving "three-stream integration" of payment flow, human-enterprise flow, and fund flow, and realizing "invoice upon payment, tax upon invoicing, warehousing upon tax payment". For resource recycling enterprises, this model has advantages such as no need to handle declarations on behalf of natural person sellers on a monthly basis, no need to separately establish various accounts to verify the authenticity of business, and more standardized processes; for natural person sellers, it also offers advantages such as tax payment upon invoicing and lower tax-related risks. To encourage more recycling enterprises and natural person sellers to choose the "three-stream integration reverse invoicing" model, combined with the technical advantage of the "three-stream integration reverse invoicing" model in enabling real-time cumulative sales amounts, we have appropriately lowered the prepaid individual income tax rate for income earned under this model.

II. How is the prepaid individual income tax rate for income earned under "three-stream integration reverse invoicing" adjusted in this announcement?

According to this announcement, from July 1, 2026, when natural persons selling scrap products through "three-stream integration reverse invoicing" sell scrap products to resource recycling enterprises, the portion of the annual sales amount (excluding VAT) under "three-stream integration reverse invoicing" not exceeding RMB 600,000 shall be subject to a 0.25% prepaid individual income tax rate, and the portion exceeding RMB 600,000 shall still be subject to a 0.5% prepaid individual income tax rate. At the same time, when natural person sellers sell scrap products through other forms of "reverse invoicing," they shall still be subject to a 0.5% prepaid individual income tax rate based on the sales amount.

For example, if seller Li’s first sale of scrap products through "three-stream integration reverse invoicing" to Resource Recycling Enterprise A on November 25, 2026 amounts to RMB 300,000, and before this sale from July 1, 2026, Li has already sold RMB 400,000 through "three-stream integration reverse invoicing" to Resource Recycling Enterprise B and prepaid RMB 100,000 × 0.25% = RMB 1,000 in tax, then the tax prepaid for this sale shall be:

（60－40）×0.25%＋（30＋40－60）×0.5%=0.1万元

III. Does the income from scrap product sales obtained by natural person sellers through "three-stream integration reverse invoicing" still need to undergo annual individual income tax settlement?

According to this announcement, except for differences in the prepaid rate, other services and tax withholding administration shall be implemented in accordance with the Announcement of the State Taxation Administration on Relevant Matters Concerning the "Reverse Invoicing" of Natural Persons Selling Scrap Products to Resource Recycling Enterprises (2024 No. 5). Therefore, before March 31 of the following year, sellers shall independently complete the annual individual income tax settlement through the competent tax authority at the place of their business operation.

Still using the above seller Li as an example, when filing the annual individual income tax settlement in the following year, if the year has no other income from "reverse invoicing" and no other business income, and complete, accurate cost and expense data cannot be obtained, the taxable income amount for the year cannot be correctly calculated. The tax authority will assess tax at an applicable tax rate of 5% and apply a 10% taxable income deduction factor, and the annual tax payable is: (40＋30)×5%×10%－0.15 = 0.2万元. Since the prepaid tax equals the annual tax payable, no tax refund or supplementary payment is required in the settlement.

IV. If a resource recycling enterprise wants to use "three-stream integration reverse invoicing," how should it prepare?

If a resource recycling enterprise wants to use "three-stream integration reverse invoicing," it needs to make the following preparations:

(1) Select the corresponding payment platform (such as UnionPay Business, WeChat, Alipay, China Merchants Bank, ICBC, etc.) and open the relevant account.

(2) The payment platform invites the resource recycling enterprise via the electronic tax bureau to act as the used car disposal unitusing entity, and the resource recycling enterprise confirms consent through the electronic tax bureau.

(3) According to the business needs of the resource recycling enterprise, the payment platform organizes interface development and functional integration.

(4) After the functional integration is completed, when the resource recycling enterprise makes an online payment, "three-stream integration reverse invoicing" can be automatically triggered.

V. When a resource recycling enterprise uses "three-stream integration reverse invoicing," how should the natural person seller operate?

When a resource recycling enterprise uses "three-stream integration reverse invoicing," the operating procedures for natural person sellers on different payment platforms vary slightly. Taking the Alipay platform as an example, the specific process is as follows:

(1) The resource recycling enterprise purchases scrap from the natural person seller. After entering transaction information such as item name, unit price, and weight, the platform automatically calculates the payment amount, automatically pre-fills the invoice, and automatically generates the tax payment information to be withheld.

(2) The resource recycling enterprise displays the "payment code" to the natural person seller.

(3) After the natural person seller scans the code and the tax payment is warehoused, the payment is automatically transferred to the natural person seller’s account, and the invoice is automatically issued and uploaded.

VI. Has the individual income tax policy supporting residents’ home purchase trade-in been adjusted?

According to the Announcement of the Ministry of Finance, the State Taxation Administration and the Ministry of Housing and Urban-Rural Development on Continuing to Implement Individual Income Tax Policies Supporting Residents' Home Purchase Trade-in (2026 No. 3), the policy supporting residents' home purchase trade-in for individual income tax will continue to be implemented until December 31, 2027. Specific provisions and declaration procedures also continue the previous regulations, and taxpayers who meet the conditions shall handle matters in accordance with the provisions of the Announcement of the State Taxation Administration on Relevant Tax Withholding Matters Concerning Individual Income Tax Policies Supporting Residents' Home Purchase Trade-in (2022 No. 21).