Unlike countries that rely heavily on the year-end audit process to ensure proper reporting and payment of taxes, the Chinese government enforces compliance by closely tracking individual transactions with a unique kind of receipt called a fapiao. The fapiao serves as proof that a taxable transaction has occurred, both for the Chinese government as well as the business offering the service. That said, a fapiao is more than a simple receipt. While receipts are used to record a transaction, fapiaos are the main instrument used by the Chinese government to oversee tax paid on any transaction. Fapiaos are printed and administered by the tax authorities who then distribute them to qualified businesses according to the scope of their services.
Check out the link below and watch a video where Emily Fang, our regional finance manager based in Shanghai, explains details related to the fapiao. We've also put together a whitepaper with more details: The fapiao is your friend!
Maintaining compliance in China isn’t an easy mountain to climb. But it does get easier when you work with a relocation management company that has a presence in China, and can guide you down some seemingly winding paths to reach your business objectives in this incredible part of the world.
First, what is fapiao? A fapiao is a legal receipt that serves as a proof of purchase of goods and services. In this way, fapiao serves as a paper warranty against tax evasion, unlike other countries where invoices serve as a tax receipt.