To start with, in order to give you a clear layout after reading this article, we simply introduce Chinese Fapiao. After, we will explain how Chinese Fapiao closely connects to taxation and work permit! As we mentioned before, Guangzhou Foreign Expert Bureau gives work permit by censoring the status of tax payment of a company. (Attention! Latest News about Work Permit from Chinese Government)
Therefore, if you are going to settle down in China by working for years to get a permanent residence. Then we suggest you read this article carefully and have a good understanding to the connection between Fapiao, taxation, work permit and work visa!
Fapiao is a kind of official receipt, which served like invoices in foreign countries. It has the following purposes,
The photo on the left is the invoice in foreigner countries, the right is Chinese Fapiao.
Served for a tax deduction or accounting.
1. Get reimbursed for any kind of purchase in China;
2. Return a purchase or access other possible after-sales services,
But Fapiao is special in China because they’re actually issued by the government, Laws in China require retailers to buy Fapiao, (they cannot print their own Fapiao and issue them that way).
In reality, a Fapiao is a form of taxation; a way of making sure that retailers are paying tax on their sales because part of a company’s taxes are calculated based on the amount of money it has issued in Fapiao over the relevant tax period.
There are two major categories of fapiao –general value-added tax (VAT) Fapiao and special value-added tax (VAT) Fapiao. The main difference between the two is that the latter can be used for tax deduction purposes, while the former cannot.
General VAT Fapiao is used as evidence of payment where special VAT Fapiao does not apply.
For enterprises or individuals who are not able to issue special VAT Fapiao (such as general commercial taxpayers who retail cigarettes, alcohol, food, clothing, shoes, and hats, makeup, and other consumer goods). They should issue general Fapiao when selling commodities, providing taxable services, or conducting other operating activities.
The special VAT Fapiao is used for tax deduction purposes, it contains a lot more detailed information including the trader’s tax code, address, telephone number, and bank account information.
If a company fails to produce a Fapiao when requested to by a customer, this constitutes an illegal act, as all business transactions are required by law to be recorded on a Fapiao.
(Getting rid of providing Fapiao equals to cheating on paying tax, this behavior leaves negative effect in applying for a work permit!)
For individual consumers, Fapiao act as proof of expenditure in cases where they need to reclaim business expenses. If a business owner is unable or unwilling to provide a Fapiao, customers have the right to report the company to the local tax bureau.
To minimize liabilities, and ensure compliance, we suggest you consult with professional advisors to understand Fapiao and to get the biggest benefits for your company.
‘Xiao piao’ is kind of a receipt in China, which is only used for evidence of a purchase, you cannot use a ‘Xiao piao’ to get reimbursed!
The photo above is ‘Xiao piao’ in China
From July 1st, 2017, when a seller issues general VAT Fapiao, the following details are needed to obey,
Necessary information including buyer’s company name, Uniform Social Credit Code or buyer’s tax code is needed to correctly write on a general VAT Fapiao.
The contents of the Fapiao should be issued in accordance with the actual sales situation. It’s not allowed to according the buyer’s requirements to fill in the transaction, which actually does not match the content.
The amount of general VAT Fapiao should be in accordance with the amount of each selling deal.
The photo above shows details on how to fill a Fapiao correctly.
1.Companies financial systems need to be updated!
2.Much more difficult for employees to reclaim.
As we keep reminding in this article, Fapiao reflects the tax-paid status of a company, if you consider hiring more foreign staff in the future, it is necessary to run the finance well. It gives more quotas in applying for work permits of a company!
As we know, after getting a work permit, then you can apply for working visa, and it needs to keep a good credit for years to gain a permanent residence!
You may also want to know these related articles:
How to Apply For Chinese Visa and Visa Renewal? [2017 Version]
Export Goods from China? You Deserve a Tax Refund!