Final provinces join digital e-invoicing (e-fapiao) pilot
All Chinese provinces have now launched their digitalise e-fapiao programmes. Last month, Anhui, Beijing, Guizhou, Hunan, Ningxia, Qinghai and Shandong joined the nation-wide trials which has started in 2021.
Tibet, the final province, joined 1 December 2023.
These are replacing the long-standing paper-fapiao and normal e-fapiao invoices which are pre-printed for the business with special invoice numbering to control recording machines and prevent VAT fraud. A new national e-invoicing platform for submission and exchange of e-fapiao will be launched in the full go live stage – date to be confirmed.
The pilot enables participants to gain certified invoices through the e-invoicing service platform, which will automatically assign a unique fapiao number when the fapiao information is generated. This compares to the long-standing pre-printed paper invoices which were bought from approved sellers. Or early digital versions available via special tax control equipment, such as golden tax USB disk, tax control USB disk, and tax UKey.
The fully digitalised e-fapiao contains much less data than the mandated paper invoice, including:
- dynamic QR code,
- invoice number,
- issuance date,
- buyer information,
- seller information,
- project name,
- specification and model,
- unit price,
- tax rate/levy rate,
- tax amount,
- ad valorem and tax total
Previous waves have included:
- March 2023: Fujian, Henan, Inner Mongolia, Jilin, Ningbo, Shenzen and Yunnan
- Jan 2023: Chongqing, Dalian, Qingdao, Shaanxi and Tianjin. Shanghai was further extended to new taxpayers.
- Nov 2022: Xiamen
- Oct 2022: Sichuan
- Aug 2022: Gansu, Guangxi, Guizhou, Hainan, Heilongjiang, Jilin, Liaoning, Ningxia, Qinghai, Shanxi, Tianjin, Xinjiang and Yunnan.
2020 Pilot spreading to all regions
The pilot started in September 2020 with 3 regions, Hangzhou, Ningbo and Shijiazhuang. A further 36 were added in 2021. Five more were added at the end of 2021 and a further batch through the first half of 2022. The portal has also now been updated issue and take receipt of invoices. It is expected that special e-fapiao will be compulsory for all Chinese businesses by 2023.
E-fapiao’s were first introduced into China in 2015 but could not be used for VAT deductions. The newer ‘special e-fapiao’ was initially launched in 2017 for the e-commerce, telecoms, financial and similar high-volume transaction sectors.
Check VAT Calc’s global live VAT invoice transaction and e-invoice reporting tracker to see where else real-time submissions of invoices is being implemented.
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General and Special Fapiao Chinese Paper Invoice
Fapiao is a Chinese invoice which was in paper form, and historically came as two types:
- General Fapiao – an accounting voucher to evidence transactions by all businesses, including individuals. These have now largely switched to e-invoice versions.
- Special fapiao – an invoice which support the VAT element of a transactions, and provides evidence for the deductibility of VAT. Special fapiao are only produced by businesses with a turnover above RMB 5million per annum.
Paper fapiao invoices
Both invoices were in paper form. To issue an invoice, a businesses must first order blank sheets of specially templated fapiao paper from their Chinese local tax bureau within its quota every month, print the transaction information on the fapiao sheets with a special printer that is linked to and controlled by the tax system, and then seal the fapiao with a dedicated fapiao seal showing the issuer’s name and tax identification code, and other necessary information.
E-fapiao – government generated digital data invoice
The electronic fapiao is being piloted to replace the paper-based system which is proving cumbersome as the economic has expanded. E-fapiao is a digital set with a unique digital signature. It is controlled by the regional Taxation Bureaus, with invoices processed and checked via the national unified invoice application. They can be based on PDF or OFD formats, but must include QR Code. The platform generates a unique digital invoice number for each submitted invoice. The invoice is then returned to the seller and their customer through their login accounts.
With the success of general e-fapiao programs, and special e-fapiao in limited sectors, from 2020, these were extended to many other B2B areas in selected regions and cities. It is expected that most major regions will switch to mandatory special e-fapiao’s by 2022, and it will go country-wide by 2023.