Since issuing an invoice in China is one of the most important aspects of business in China, there are many foreign companies that are confused on taxes after setting up a Wholly foreign owned enterprise (WFOE) in China.
That said, the most recent tax reforms that’s been carried out by China makes the current invoice system complex for foreigners. This is why you need the experience and expertise of Business China when it comes to Fapiao management in China.
The Logic Behind China Invoice (Fapiao)
China works under the ‘Control Tax-Collection by Invoices’ system, which means that the country controls all tax payments by tracking official invoices. It is no surprise that invoices in China (Fapiao) use the same templates and are required to be submitted by the tax bureau.
For instance, when it comes to VAT invoices, each invoice has a valid invoice code. This means, it can be printed by the billing machine that’s bought by the tax bureau. Besides that, the tax deduction application process and the China tax rate includes the invoice verification by the tax office. This means for better Fapiao management in China, you are going to need a service that’s familiar with Fapiao in China. This is where Business China comes in.
China Invoice (Fapiao) Definition & Application Range
Foreign businesses usually have a hard time understanding Fapiao, mainly because the concept is only practiced outside of China. It is mandatory that establishing a business in China, all business transactions are required to record their transactions on an official receipt, which is commonly known as a ‘Fapiao’ in China. An ‘invoice’ refers to any business payment vouchers that are issued or collected in the buying or selling of commodities, or when providing or accepting services in China.
In a way, the Fapiao is considered to be the only legitimate method of accounting when it comes to recording the cost of a product or service, being provided or received.The Fapiao must be printed on an official receipt supplied by Chinese tax authorities, or else the business transaction is not going to be recognized by the Chinese tax authorities.
This is another reason you are going to need the professional services of Business China for establishing a business in China. A china invoice issue also needs to include the company name to declare the costs of reimbursement.
