According to the Supplementary Notice of State Taxation Administration of The People's Republic of China on Amending the Provisions on the Use of Special VAT Invoices (Guo Shui Fa [2007] 18), if a general VAT taxpayer issues a special VAT invoice (hereinafter referred to as the special invoice), sales returns, sales discounts, billing errors and other situations need to issue a special red-ink invoice, it shall be handled in the following ways:

(1) If the deduction of the special invoice and the invoice cannot be authenticated, the buyer shall fill in the Application Form for Issuing the Special VAT Invoice in Red Letter (hereinafter referred to as the Application Form), fill in the specific reasons and the corresponding information of the special VAT invoice in blue letter on the application form, and the competent tax authority shall issue the Notice for Issuing the Special VAT Invoice in Red Letter (hereinafter referred to as the Notice) after examination. The buyer will not transfer the input tax.

(2) If the goods purchased by the buyer do not fall within the scope of VAT deduction, and the special invoices obtained are not authenticated, the buyer shall fill in the application form, fill in the specific reasons and the information of the corresponding special invoices in blue on the application form, and the competent tax authorities shall issue a notice after examination. The buyer will not transfer the input tax.

(3) If the buyer refuses to issue a special invoice due to an error in invoicing, the seller shall fill in the application form to the competent tax authorities within the certification period of the special invoice, and fill in the specific reasons and the information of the corresponding special invoice in blue on the application form. At the same time, the buyer shall provide written materials to explain the reasons for rejection, the wrong specific items and the correct contents, and the competent tax authorities shall issue a notice after examination and confirmation. The seller shall issue a special red invoice with a notice;

(4) If the special invoice is not delivered to the buyer due to billing errors and other reasons, the seller shall fill in the application form to the competent tax authorities within the month following the issuance of the wrong special invoice, and fill in the specific reasons and the information of the corresponding special invoice in blue on the application form. At the same time, the seller shall provide written materials to explain the specific reasons, specific items and correction contents of the error, and the competent tax authorities shall issue a notice after examination and confirmation. The seller shall issue a special red invoice and notice.

(5) In case of sales return or sales discount, in addition to handling according to the provisions of the Notice, the seller should also submit a copy of the corresponding accounting voucher for this business to the competent tax authorities for the record after issuing a special red invoice.