Invoicing can be difficult in any country. Let alone China. But don't worry. That is why we are here. To briefly explain what the changes have been with digital invoicing. and see a brief overview Here's how to issue invoices in China:

Before we begin The most important thing to understand is that When it comes to the national tax invoice management system in China, There should not be any cut corners. Knowing and understanding China's bureaucracy is important for your business. And be clear: all domestic transactions in China must be recorded and invoiced. If the seller refuses to issue an invoice The buyer can appeal to the tax authorities.

So what are Fapiao and e-Fapiao?

Fapiao china means "receipt" in English and is just a method of collecting money in China. This means that Fapiao is a legal proof of purchase of goods or services. Like proof of purchase in other countries, Fapiao is a Chinese tax invoice. It is a legal physical receipt issued on paper and distributed, printed and administered by the STA (State Taxation Administration).

After the latest pilot project proposed by the Chinese government in December 2020, “Fapiao” has been changed to electronic Fapiao or e-Fapiao, in fact. Due to the Covid-19 outbreak and subsequent lockdown, the demand for paperless versions of fapiao has increased. Therefore, China's current invoicing methods have changed from printed paper forms to digital forms in most major cities.

The e-Fapiao system is managed by the State Tax Administration of China (STA). The government agency issues, distributes, registers and supervises the management of Fapiao throughout China, and from 2022 onwards, it will be the platform for e-Fapiao STA designated. Invoices for various companies In China, according to their business activities, for example, the quota for small taxpayers may include a fapiao booklet containing 25 to 50 sheets of paper, and the value of each sheet should not exceed 10,000 yuan. But thanks to the new e-Fapiao, All of this can be done online without paperwork.

If you are doing business in China or starting a business in China, please note that newly established WFOEs (Whole Foreign-Owned Entities) are subject to several restrictions on the number of invoices that can be issued. received every month and the total value of Each invoice These requirements vary by location in China. and is handled locally at the appropriate tax office.

Using Fapiao or e-Fapiao:

Buyers use it to recover business expenses.

Sellers use these to pay taxes, compensation, and rebates.

The government uses the e-Fapiao or Fapiao system to track payments and fight tax evasion.

Switch to e-Fapiao – Digital Invoicing in China

Following the completion of the overall e-Fapiao reform in 2016 and as part of China's efforts to digitize commercial processes, A special VAT e-Fapiao pilot project was launched in China in September 2020. Fapiao in major Chinese cities will be completed in 2022 and will be fully operational nationwide in 2025. Any company wishing to enter Chinese market from now on will be able to benefit from the relief that the electronic version provides for invoicing China.

Why is e-Fapiao good for your business?

Here are some of the most obvious benefits of digital invoicing in China:

It's easier and faster to buy, process and deliver.

Fapiao sheets can be checked and validated online before filing a tax return in China.

e-Fapiaos are stored online. Therefore it is not lost and can be reprinted.

e-Fapiaos can be easily integrated into company systems. and improving broader processes such as annual reporting. Supply chain management, etc.

There is no need for paper, ink and delivery services. And it is also environmentally friendly.

Read more about the financial aspects of doing business in China in our guide to financial regulations for foreign companies in China.

Three practical implications of e-Fapiao for your company

Increased efficiency and automation – The shift to e-Fapiao will not only impact WFOE accounting and general accounting in China. But it also affects all business operations in China. That's why many companies are taking the opportunity to update and optimize additional business functions to achieve greater accuracy and productivity with e-Fapiao. Please note that additional costs and periodic updates may apply. for new electronic systems

Increased Transparency – These digital tools increase transparency. Therefore, digitalization not only increases the government's ability to monitor business activities in China. but also the management of the company.

Careful handling – because e-Fapiao is easier to create and reprint. Finance teams should therefore pay careful attention to e-Fapiao and its models to avoid recurrence.