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PRC Tax Receipt Verification

PRC Tax Receipt Verification, or Fapiao(发票) in Chinese, are official invoices issued by the government for goods or services purchased while in China.  Other countries have similar systems that record transactions made within their borders.  However, China is different in the way that these invoices are a way for the Chinese government to monitor the amount of tax that was paid on any transaction.  Fapiao are printed and distributed by tax authorities who then require them to be bought back by the taxpayer, in accordance to what their business requires them to have.  Fapiao can be broken down into two categories: general invoice and special value-added tax (VAT) invoice.

General Invoice

These receipts are used in places where special value-added tax invoices do not apply.  Any business owner who is unable to issue a special VAT invoice, should use these as their default invoice.

Who are General Invoices used by? 

  • Business taxpayers
  • VAT small-scale taxpayers
  • VAT general taxpayers who cannot issue special VAT invoices, in other words, people who sell commodities that are not taxed (i.e. clothing, cigarettes, etc.)

When are General Invoices used?

  • Selling commodities
  • Providing taxable services
  • Conducting any other operation that would result in revenue

Special Value-Added Tax (VAT) Invoice

These invoices cannot be issued in the sale of tax free commodities.  A Special Value-Added Tax invoice can be used as a proof of expenditures (e.g. proof of expenditure on a business trip), or it can sometimes also be required for foreigners from their landlords to show proof of residence for visa purposes. This type of invoice differs from a general invoice in terms of its procedure, it requires three copies:

  • The first copy is to be kept for the records of the person issuing the invoice.
  • The second copy is intended to be used by the consumer when they use the invoice to get a deduction or reimbursement for their expenses.
  • The third copy is meant as a bookkeeping copy for the customer.

This formal receipt is important when conducting business of any kind in China.  However, when relying on this type of accounting, there are risks for fraud.   That is why it is so important to have a reliable team to be able to help verify tax receipts.  Verification is an important step in maintaining thoroughly checked and certified accounts.  Here at LehmanBrown, we have teams of experts who are practiced in their verification skills and will make sure your company records are maintained according to accounting standards.

For more information on our tax services concerning PRC Tax receipt verification, please contact us at enquiries@lehmanbrown.com