Commercial transactions in China are highly controlled, particularly when it comes to operational invoicing. It is mandatory to utilize certain invoices that have been registered with and provided by the tax bureau. These are known as fapiaos. In this essay, we’ll go through the fapiao system and how it affects your business operations in China.
What is a fapiao?
The term fapiao refers to an official slip that acts as confirmation of purchase for products and services in China. Because only the tax bureau is permitted to print invoices in China, any financial transaction recorded without utilizing one of these invoices is not recognized by the Chinese tax administration. These fapiaos are expressly developed to combat tax evasion, particularly with reference to VAT. It is easier for sellers to evade paying a portion of the VAT collected under a system lacking uniform invoices. The customer, on the other hand, can only justify a purchase (for example, to their employer for reimbursement) by providing a fapiao.
Types of fapiao
issued under any other circumstances by any other size of firm These can be given in a variety of situations, including sales of commodities, tax-free services, or VAT-registered operations by small taxpayers. In all circumstances when a taxpayer subject to VAT is not authorized to issue the special VAT fapiao, such as non-taxable transactions, the regular VAT fapiao is to be utilized. It is typically utilized by small retailers (food, clothing, alcohol and cigarettes etc.)
As a result, invoicing requirements can be challenging for a foreign expert wanting to expand their firm in China. INS Global, which has been in China since 2006, has extensive understanding of these standards and provides businesses with a service for the proper handling of their bills.
General VAT Fapiao: New requirements
- Company’s full listed Chinese name
- Tax ID number
- Fapiao with corresponding transaction summary
- Special fapiao chop from the sender
Special VAT Fapiao: New requirements
- The complete information of the correct beneficiary in the upper left corner of the corm (Chinese company name, tax ID number, address, telephone number, bank name, account number)
- Fapiao access code printed carefully in the correct field
- Breakdown of tax in accordance with goods and services
- Fapiao content with corresponding transaction summary
- Special fapiao chop from the sender
To discuss more about your company’s tax issues, please contact us for free consultation.
