Fapiao, the unique practice in mainland China, is mandatory for establishing a business in the country. All business transactions are required to record their transactions on an official receipt, which is commonly known as a “Fapiao” in China. In a way, the Fapiao is considered to be the only legitimate method of accounting when it comes to recording the cost of a product or service, being provided or received.
Significance of China Fapiao (Invoice)
1. Fapiao is an indispensable part of tax compliance in China.
2. Fapiao has the characteristics of legality, authenticity, unity, and timeliness, which is one of the most fundamental accounting evidence.
3. Fapiao is the carrier of the content of economic activities, which is an essential tool for fapiao management in China.
4. Fapiao is a crucial basis for tax authorities to control tax source and collect tax.
5. Fapiao is a necessary means for the state to monitor economic activities, maintain economic order and protect the safety of state property.
Types of Fapiao (Invoice) in China
You can also divide the China tax Invoice (Fapiao) into two main types of Fapiao. The General VAT invoice (Fapiao), and the Special VAT Invoice (Fapiao). The Special VAT Invoice can be utilized for tax deductions and can be applied by the general taxpayer (status). According to the law in China, every foreign business that is set up in the country will be identified as a Small-scale Taxpayer at the time of its establishment, which can be upgraded to the status of General VAT Taxpayer afterwards.
When it comes to Fapiao management in China, there are basically two types of taxpayers:
1. Small-scale VAT Taxpayer;
2. General VAT Taxpayer.
Accordingly, Fapiao can be classified into two categories:
1. General VAT Fapiao –This is applied under small-scale VAT taxpayer and general VAT taxpayer.
2. Special VAT Fapiao – This is used for the tax deduction and can be applied for under the General VAT Taxpayer status.
The process of a Fapiao can be complex which is why you need the expertise of Tannet for Fapiao management in China. We offer our clients with comprehensive accounting, bookkeeping, and tax compliance solutions to safeguard your business in China.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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