Were you always waiting for an easier way to issue fapiaos to your customers? If so, you have surely welcomed the new trend towards issuing electronic fapiaos or "e-fapiaos." E-fapiaos have significant advantages for the efficiency and reduced costs they can provide.

What is an E-Fapiao?

An e-fapiao is the offspring of a traditional fapiao, except electronic. An e-fapiao is an electronic tax invoice issued when a good or service is purchased. It gives the buyer proof that tax was paid on the purchase and allows certain businesses to deduct the tax amount as a business expense, often to net out and reduce a company's own VAT taxes.

China breaks fapiaos down into two different categories: general and special. A special fapiao can only be used by taxpayers who have sales above 5 million RMB, while a general fapiao can be used by any company registered in China.

How Does an E-Fapiao Differ from a Regular Fapiao?

The concept of e-fapiaos is identical to regular fapiaos. The only difference is the way the fapiaos are issued. Traditional fapiaos have been issued on paper and followed a tedious process that includes issuing the fapiao, paying the fapiao tax, and claiming the fapiao as an expense on the tax return. Vendors and customers demanded fapiaos because they were only allowed deductions backed by an official fapiao. The government saw the demand for fapiaos and sought ways to make the process easier for both the government and businesses issuing fapiaos. After enough demand, planning, and a trial run, the e-fapiao was born.

How Does an E-Fapiao Work?

An e-fapiao comes in the form of a data file that is created from the official tax system. Having a standard format allows for more structure throughout the processing system. An e-fapiao gives businesses the ability to submit a fapiao online, and then users can download a pdf version and print it out whenever needed. The fapiao calculations remain the same, as do the limitations and regulations. The only aspect that is changing is how the fapiaos are submitted to the government.

What are the Advantages of an E-Fapiao?

The advantages of e-fapiaos far outweigh the costs. E-fapiaos give businesses and customers more convenience. Companies no longer need to worry about the tedious time spent processing fapiaos by hand. Instead, they can easily submit the documents online. Additionally, the process is simplified with e-fapiaos. Only one copy is needed for e-fapiaos compared to the multiple copies that were required under paper fapiaos. Businesses can also save costs associated with processing fapiaos since the process is now more simplified and efficient. You don't have to pay high costs for storage and printing, and your employees have more free time to work on other valuable tasks.

Monitoring the Use of the E-Fapiao

The e-fapiao has been around since 2015, but the government is getting stricter on its use. For example, according to recent laws passed, the receiver of an e-fapiao must also check the document's accuracy. Moreover, e-fapiaos are required to be downloaded in a particular format that Chinese officials can easily read. This can cause some technology needs upfront, but it is necessary to be fully compliant.

The rules also require businesses to have review and signature policies and procedures in place to avoid duplication of fapiaos. This is to deter using the same fapiao to enter information. The rules also stipulate that companies should not simply print out copies of e-fapiaos for records. Instead, businesses should only use e- fapiaos for reimbursements and archive records correctly. The archival records should be retained for 10 to 30 years.

What Does the Future Hold for E-Fapiaos?

The future of e-fapiaos looks promising as it is a more straightforward way for businesses to get fapiaos out the door.  As time goes on, it is not unlikely that the government will require all companies to adopt this system. Processing is more manageable and efficient for all parties involved. If you are a business established in China, consider adopting e-fapiaos to save you time and money and comply with the changing government policies and preferences before it is required.

Summary

The switch from paper fapiaos to e-fapiaos is becoming increasingly popular in China because of its advantages to businesses and their customers.

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