Fapiao: Why Everyone Keeps Asking You for One
China Field Notes · by Daona · 8 min read
In China, a receipt is not enough. Companies need a fapiao — an official tax invoice issued through the tax authorities' system — to deduct costs and reclaim VAT. Once you understand that, a lot of everyday behaviour suddenly makes sense.
Foreign visitors notice it within days. A colleague finishes a taxi ride and asks for a fapiao (发票). After a business dinner, someone asks the restaurant for one and types a long code into their phone. A supplier you just paid asks for your company's full name and tax number. A new hire asks, before buying anything, "Can they give us a special fapiao?"
The reason is practical: for a Chinese company, a cost without a fapiao is often a cost it cannot deduct for tax.
A fapiao is an official invoice issued through the tax authorities' invoicing system, recording seller, buyer, goods or services, amount and VAT. The tax bureau sees every fapiao the moment it is issued.
Since 1 December 2024, fully digitalised e-fapiao (全面数字化的电子发票, 数电票) have been rolled out nationwide. They are issued on the tax platform, delivered as files or via QR code, and have the same legal validity as paper. Each taxpayer's invoicing quota is set by its risk profile, credit rating and actual operations. Fapiao now arrive by email, in an app or through a link.
| Special VAT fapiao 增值税专用发票 | General fapiao 普通发票 | |
|---|---|---|
| Who can request | General VAT taxpayers | Anyone, including individuals |
| Input VAT credit | Yes | No |
| Supports CIT deduction | Yes | Yes |
| Typical use | Company purchases: materials, services, equipment | Meals, taxis, hotels, retail |
If your China company is a general VAT taxpayer, ask suppliers for a special VAT fapiao whenever you can. The VAT on it can be credited against the VAT you charge customers. With a general fapiao, it becomes a cost.
1. Corporate income tax deduction. Under the tax authority's rules on pre-tax deduction vouchers, a fapiao is the standard evidence that a domestic purchase is a deductible cost. Without one, the cost may be disallowed — and taxed at 25%.
2. VAT credit. General taxpayers can only credit input VAT with a valid special fapiao (or certain other documents such as customs import VAT certificates).
3. Expense claims and audit. Most companies will not reimburse an expense without a fapiao. Auditors check them.
China's Value-Added Tax Law (增值税法) and its implementation regulations took effect on 1 January 2026, turning the interim regulations into a full law. The basic structure is unchanged:
| Rate | Main categories |
|---|---|
| 13% | Most goods; repair and processing; leasing of movable property |
| 9% | Transport, postal, construction, real estate, basic telecom; certain farm products, utilities, books |
| 6% | Most other services: consulting, IT, financial, R&D, advertising, catering, accommodation |
| 0% | Exports of goods and certain cross-border services |
Small-scale taxpayers — generally annual taxable sales of ¥5 million or less — use a simplified method: the 3% levy rate is reduced to 1% until 31 December 2027, and monthly sales of ¥100,000 or less are exempt. They cannot credit input VAT, which is one reason growing companies become general taxpayers.
Your subsidiary, a general VAT taxpayer, buys consulting services for ¥106,000 including 6% VAT.
| Special fapiao | No fapiao | |
|---|---|---|
| Price paid | ¥106,000 | ¥106,000 |
| Input VAT credited | ¥6,000 | ¥0 |
| Deductible for CIT | ¥100,000 | ¥0 |
| Tax saved at 25% | ¥25,000 | ¥0 |
| Net cost | ¥75,000 | ¥106,000 |
Illustrative.
A missing fapiao turned a ¥75,000 cost into ¥106,000 — about 41% more. That is why your finance team keeps asking.
When a supplier asks for your "开票信息" (invoicing details), give:
· Company name — exact registered Chinese name
· Taxpayer ID — your Unified Social Credit Code
· For special fapiao, some suppliers also ask for address, phone, bank and account number
Keep these in one message or a QR code, ready to forward. For an employee's reimbursable expense, the title should be the company's name and tax number. Ask at the time of purchase; if a merchant issues later through a link, do it within the same month.
A foreign company without Chinese tax registration cannot issue a fapiao. When your subsidiary pays a foreign supplier — software, consulting, royalties, management fees, interest:
· Withholding taxes. The Chinese payer generally withholds the taxes that apply — for example VAT on services consumed in China, and corporate income tax on China-source royalties and interest. A tax treaty may reduce rates. Confirm per contract type with a tax professional.
· Tax record filing. A single outbound payment of more than US$50,000 for services, royalties and similar items needs a tax record filing before the bank remits. Foreign-language contracts need a Chinese translation.
· Supporting documents — contract, foreign invoice, tax certificates and the filing — serve as deduction evidence in place of a fapiao.
Plan for this in intercompany agreements: who bears the withholding tax, and whether prices are gross or net.
Never buy fapiao. Issuing or using fapiao that do not reflect a real transaction (虚开发票) is a criminal offence under Article 205 of the Criminal Law, with serious penalties for companies and individuals.
Never accept a fapiao from a different company than the one you contracted and paid. The tax system matches seller, buyer, contract and payment.
Don't accept "fapiao later" for large amounts. Make payment due against a valid fapiao, or release the final payment when it arrives.
"A receipt is the same thing." A shop receipt (小票) is not a fapiao and does not support deduction.
"Our China entity can deduct anything we paid for." Only with valid evidence — usually a fapiao for domestic purchases.
"General fapiao is fine for everything." It supports cost deduction, not VAT credit.
"Fapiao rules don't affect headquarters." They affect intercompany charges, royalties and management fees paid from China.
"Paper fapiao are safer." Digital fapiao are verified on the tax platform and easier to authenticate.
Your checklist
☐ Invoicing details (name and tax ID) saved as a message or QR code
☐ Staff ask for company-titled fapiao for every reimbursable expense
☐ Purchasing requests special fapiao from general-taxpayer suppliers
☐ Contracts make payment conditional on a valid fapiao
☐ Outbound payments over US$50,000 have tax record filing scheduled
☐ Intercompany agreements state who bears withholding taxes
☐ Zero tolerance for purchased or mismatched fapiao in the expense policy
Rules as of October 2026. This column provides general information, not tax advice. Tax filings and withholding should be handled by your finance team or a licensed tax professional.
China Field Notes · by Daona