Voluntary digital e-invoicing (e-fapiao) goes statewide 1 December 2024
Following the completion of the phased pilot of the Chinese digital e-fapiao programme, the State Taxation Administration (STS) has confirmed on November 24 2024 the full statewide operation from 1 December. This places e-invoices on an equal footing as paper fapiao invoices; at this stage, it is a voluntary mandate.
Digital e-invoicing platform launch
To support the rollout, the STA is establishing a nationally unified electronic invoice service platform and regulations. This platform will provide taxpayers with free services for issuing and managing digital invoices. Tax authorities will determine the invoice quotas available to each taxpayer based on factors such as tax risk level, tax credit rating, and actual business operations. These quotas will be subject to dynamic adjustments to ensure they align with the taxpayer’s circumstances.
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 now used on a voluntary basis across the county will eventually 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.
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,
- quantity,
- unit price,
- amount,
- tax rate/levy rate,
- tax amount,
- total,
- ad valorem and tax total
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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