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Understanding Fapiao — Local Invoice in China

Understanding Fapiao—Local Invoice in China

Definition: “Fapiao” (发票)  are 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”s are more than just ordinary receipts. They are also a way that the government monitors the tax paid on any transaction.

Fapiao-general invoice
Fapiao in China-general invoice

Fapiao is important in China for Tax

In China, “fapiao”s are more than just ordinary receipts. They are also a way that the government monitors the tax paid on any transaction, the value added tax (VAT) or service tax.

All business activities need to provide fapiao at the customer’s request.

Fapiaos are mainly sorted into two categories

  • general invoices
  • VAT invoices.
Fapiao-VAT invoice
Fapiao in China-VAT invoice

Differences between the two

  • VAT invoices can be used for tax deduction purposes, while the general invoices cannot.
  • VAT invoices contain a lot more detail with respect to the trader’s information, including tax number, address, telephone number, bank account information, and other such information.
  • The purchase amount on a VAT invoice is usually explicitly broken down into its non-tax and tax components, while the amount shown on the general invoice is usually a tax-inclusive figure.

Normally service fapiao belongs to general fapiao.

Advices for Business Owners

By law all local businesses are required to produce a receipt at the customer’s request at the time of purchase.

For the common consumer spending money in China, fapiaos can be used as valid proof of expenditure in the case where one might need to reclaim any expenses made, i.e. on a business trip. Customers prefer companies who can provide the most convenient way for their reimbursement.

  • You need to have a local China company first
  • Check with your accountant which type of invoice you need according to the purpose intended.