Fapiao (发票: fā piào) is a legal receipt that serves as proof of purchase for goods and services. It is an official invoices in China, registered at the local tax bureau, which are used as some kind of final proof-of-purchase of a good or service. In China, fapiao is more than just ordinary receipts. They are also a way that the government monitors the tax paid on any transaction. The fapiao system is used by Chinese tax authorities to calculate and collect business taxes as well as to deter tax evasion. A fapiao is provided by businesses to consumers for the amount of services or goods rendered much like a receipt.
Characteristics of Fapiao
Fapiao differ from regular receipts in that they are printed on special paper that must be purchased from the tax authorities. If a transaction is not printed on an official fapiao, the authorities will not recognize it, and the enterprise will be unable to use the expense for tax deductions or refunds. This also means that employees must submit official fapiao to declare expenses for reimbursement from their employer.
A company may only issue a fapiao if the transaction is within that company’s business scope. For this reason, when a company first applies for a license to issue fapiao, the tax authorities will look at the company’s size and business scope to decide what kind and how many fapiao the company may legally issue.
Types of Fapiao
There are two major categories of fapiao: general fapiao and special value-added tax (VAT) fapiao. The main difference between the two is that the latter can be used for tax deduction purposes, while the former cannot. Given the different types of fapiao, companies should check with an accountant to confirm which type of fapiao they need before making any fapiao purchases with the tax authority.
General VAT fapiao are used as evidence of payment where special VAT fapiao do not apply. There are two formats of general VAT fapiao——the normal general VAT invoices and the roll invoices. Although taxpayers can choose either type at their own will, the latter are mainly used in the life services industry.
Special VAT fapiao are issued by general taxpayers to customers when selling commodities or providing taxable services. Special VAT fapiao cannot be issued for sales of tax-free commodities.
Since the VAT fapiao is used for tax deduction purposes, it will contain a lot more detailed information including the trader’s tax code, address, telephone number, and bank account information. Additionally, the purchase amount on a VAT fapiao is usually explicitly broken down into its taxable and non-taxable components, while the amount shown on the general fapiao is usually a tax-inclusive figure.
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