Know The Process of Fapiao System
Fapiao directly means to “invoice”, but it is not enough to translate it. The fapiao system is more complicated than just a simple invoice, and there are different types of it available. What a lot of people do not know is that the Fapiao is a tax invoice and legal receipt. It serves as proof for the goods and services. Consecutively, it determines the tax that was paid on a transaction.
China’s invoicing system in particular that all organizations within China should familiarize themselves with it because it is mandatory.
The Types of Fapiao
It has two major categories:
Special Value-Added Tax Fapiao
The value-added tax fapiao is useful for a tax deduction. Therefore, it has a lot of information, including the tax code, phone number, address, and bank account information of the company.
It is not generally used for a tax deduction. Usually, the amount of purchase is not broken down into different amounts. The general fapiao transactions typically happen when businesses cannot make a unique VAT fapiao transaction.
Since there are different kinds of fapiao, businesses must check their accountant so they will know which kind of fapiao they would have to request when they pay for goods and services.
The Functions of Fapiao
- For the individuals – A fapiao is essential in the reimbursement of business expenses.
Businesses will also need one when they are returning a purchase or having access to other after-sales services.
- For the companies – Businesses need a Fapiao to have a record of every business transaction they made. It is also used for tax deductions and accounting.
- Fapiao for the government – The tax authorities of China require it from businesses so that they are compelled to pay taxes. It serves as a paper warranty against the evasion of taxes.
How Can You Acquire Fapiao?
The business must file the highest amount for their fapiao registration, so their status can be determined. The maximum application consists of transactions that are over RMB 100,000 is a reason for site inspection when they apply. The fapiao that can be printed and its capital value are given specific quotas. Bureaus of local tax are the ones to determine these quotas that are linked to the actual manufacturing of business or status of business operation.
After the tax bureau has done the quota approval for select VAT invoices, businesses can already print the invoice with specific computers from the tax bureau. The printers are incorporated in the Chinese tax system. At least one member of the company will have to visit the nearest tax bureau if they want to know how to use printers.
The Responsibility of the Customer
Realizing that the customer has a responsibility to ask for a Fapiao is a crucial aspect. Sometimes, they are not issued automatically. If the business owner cannot provide a Fapiao or does not want to, customers may report them to the local tax authorities. It is their legal right to report them.
To streamline the process of issuing Fapiao, they now launched a function that allows all users to type the essential corporate tax information on an app, and show it to the service provider as a QR code they can scan.
You can talk to us to set up a business in China, and we know all about the Fapiao system. Do not hesitate to ask for assistance from us anytime.