E-invoicing compliance and regulatory updates - China

Electronic Invoicing China

In China invoices are referred to fapiao—a physical legal receipt. There are different types of fapiao for example:

• General VAT fapiao - no deductible tax is present, and is primarily used in a Business-to-Customer (B2C) context.
• Special VAT fapiao - allows tax deduction and is typically used in Business-to-Business (B2B) transactions

In 2015, China rolled out the General VAT e-fapiao as its e-invoice equivalent nationwide.

Regarding Special VAT invoices, there is a large portion of invoices that remain in paper. In these cases, organizations must register each invoice in the governmental portal or the ‘Golden Tax System’ to retrieve a unique number and print the invoice from a government provided printer.

However, the B2B invoice landscape in China is continuing the develop. For Special VAT invoices, a pilot program was launched in 2020 on a voluntary basis, encompassing different regions for Special e-fapiao expansion. The e-invoice is based on the clearance model: The supplier must clear the Special VAT e-invoice with the STA platform, before distributing to the buyer/recipient.

The pilot program is expected to grow in mega cities in 2022 and nationwide in 2023.

China is moving towards Phase 4 of the Golden Tax System pilot, allowing managing tax via Big Data exclusively for large companies with annual turnover surpassing 6 million euros. Stay tuned!

Want to learn more about e-Invoicing compliance?

Download our Global e-invoicing and Tax Compliance fact sheet here for more information.

Archiving

Digital archiving is allowed in China but requires strict adherence to a complex set of requirements, including verification of authenticity, lawfulness, and integrity. Organizations must also allow exporting data in pre-defined formats. Furthermore, companies shall establish a backup accounting system for those electronic files. The default archiving period for Chinese invoices is 30 years and 10 years for financial accounting reports.

Basware advises its invoice receiving customers to maintain a paper-based archive. Invoices that have been scanned by Basware partners will be forwarded to the customer. Using our partner-base, we can offer long-term archiving as an add-on service.

Want to know more about Basware’s archiving services?

Download our Basware Vault fact sheet here to learn more about our flexible and scalable solution.

Basware Services

Basware does not provide invoice sending services in China.

For invoice receivers, Basware has two solutions:

• Automated Fapiao validation, where we take care of the data capture, data validation, and the Fapiao validation in the GTS portal.
• Outsourced Scan & Capture, where we take care of the scanning, data capture and data validation. The receiver completes the Fapiao validation.

We can capture data provide UI in both traditional and simplified Chinese. We can also offer customer support in English.

Want to find out how we can help in your specific case?

Speak to a member of our team to learn more.

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Interoperability

Basware currently has no connections to any interoperability partners in China.

However, we do have local partners supporting the Basware Network with scanning and data validation services.

Our advice

In China, tax-deductible invoices (Special VAT fapiao) require a paper document, with a number issued by the government and printed on devices supplied by the government. Invoice receivers need to verify the number in the governmental portal upon receipt of the invoice to ensure its authenticity.

For customers with a significant volume, we advise automating this validation step. Once the invoice is scanned, an automated verification of the captured data can take place in the governmental portal. Customers with lower volume should consider keeping this as a manual step in the process.

Want to understand how we can help in your case?

Get in touch with our experts.

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