What is VAT invoice in China?

Chinese Golden Tax System The issuance of approved VAT invoices in China is strictly controlled by the tax authorities. Pre-approved paper invoices, fapiaos, are provided by the Golden Tax System. It enables the government to track VAT payments and compliance, and it provides proof of the purchase of goods or services.

How does the VAT system work in China?

The standard VAT rate in China is 13%. It applies to most goods and services. The two reduced VAT rates are 9% and 6%. China also has some zero-rated goods, the sale of which must still be reported on your VAT return, even though no VAT is charged.

Is VAT payable in China?

Specifically, the government has pledged around RMB 1.5 trillion (approx. US$ 238 billion) of large-scale tax rebates on VAT credit over the course of 2022. To increase the efficiency and effectiveness of the rebates, the government also issued directives to speed up the payment of refunds for certain businesses.

What is subject to VAT in China?

Value-added tax (VAT) The sales or importation of goods, the provision of services, and the sales of intangible properties and immovable properties are subject to VAT. For general VAT payers, input VAT can be credited against output VAT.

What is golden tax system in China?

China’s Golden Tax System or GTS is a system that uses the online network of tax authorities to closely control VAT special invoices (also known as VAT special fapiao in Chinese), monitor the corporate VAT tax status, and ensure taxpayers’ compliance.

Do you need fapiao?

Foreign businesspeople and companies should take the time to understand the fapiao system: individuals need fapiao to reclaim business expenses, while companies must record all business transactions on a fapiao. A solid understanding of the system is therefore a critical requirement.

How can China avoid VAT?

The only solution is to put all payment risks onto your Chinese customer by providing in your service contract that all payments must be made net of taxes and fees. If the amount of the invoice is $60,000, the service provider must receive $60,000.

Is VAT refundable in China?

The meeting decided to refund VAT credits to micro and small enterprises and self-employed households as general VAT payers across all sectors, which is worth around 1 trillion yuan. Outstanding VAT credits will be refunded in one lump sum by the end of June.

Does China charge VAT on imports?

All goods imported into China are subject to the nation’s value-added tax (VAT) of either 13 percent or 17 percent. The 13 percent tax is available for certain goods that fall mainly within the categories of agricultural and utility items, while the 17 percent tax applies to other goods subject to the VAT tax.

Which software must be used to generate VAT invoices in mainland China?

Introduction to Golden Tax Under this Golden Tax project, all businesses operating in Mainland China are required to use a government-certified tax software referred to as Golden Tax software for generating VAT invoices, VAT calculations, and statutory tax reporting.

What is golden tax invoice?

The Golden Tax is an integrated nationwide value-added tax, integrated value-added tax (VAT) monitoring system that all businesses operating in Mainland China are required to use to issue all VAT invoices, VAT Calculations, and statutory tax reporting.

What is China fapiao?

In China, fapiao translates to “invoice”; more specifically it is an official invoice admistered by the STA that also serves as a tax tracking system. Businesses must record all transactions on fapiao, as the system serves to combat tax evasion and ensure compliance with trade laws.

Can you claim back VAT in China?

In China, the recovery of VAT incurred on costs is carried out by offsetting the input VAT against output VAT. For exports, where no VAT is charged, the exporter may be allowed to recover part of the input VAT as cash through the monthly export VAT refund claim.

What is tax refund in China?

Tax Refund Rate The refund rate is 11% of the invoice value. However, 2% of the rebates are charged by the rebate agency as service fee.

What is golden tax number?

As per legal requirements, companies registered in China can issue VAT invoices only using the government owned Golden Tax System (GTS), which issues GT numbers for the VAT invoices sent to it. The process is to send all the required list of invoices to be sent to government owned Golden Tax System.

What does Fapio mean?

In China, fapiao (meaning invoice) is a tax receipt and works as an important accounting voucher for taxpayers to support the legitimacy of their economic activities. Enterprises registered in China are currently eligible for issuing two types of invoices, hereinafter referred to as fapiao: General VAT fapiao.

Is import VAT the same as VAT?

What is different is that VAT on imported goods is paid directly to HMRC, while domestic VAT is normally paid to a supplier of goods. After an import VAT payment is made by a UK VAT-registered trader, an HMRC form C79 showing the VAT paid will be electronically produced and sent to the business address.

Can you reclaim VAT in China?

What is China Golden tax?

Do you need Fapio?

You should ask for a fapiao if: You have made a business-related expense and need to be reimbursed for it. Your employee gives you an allowance for food or housing, and you need reimbursement for them. You need to keep track of large purchases for tax purposes.

How to issue special VAT invoices in China?

In China, taxpayers are required to use a unique printer that is approved by the tax authorities to issue special VAT invoices through the so-called Anti-forgery Tax Control System – a tax software that is implemented by the tax bureau.

What is China’s VAT rate?

By way of context, in early March 2019, the Chinese government announced a reduction in its headline VAT rate from 16% to 13%, together with a reduction of its 10% VAT rate to 9%.

What are the VAT invoices?

The VAT invoices must be consistent with the facts underlying the transaction, which means the sellers must only issue a VAT (general and special) invoice that contains the precise sales volume, total amount, and so on. And, such transactions must relate to an actual business.

How to reduce the risk of VAT compliance in China?

Also, taxpayers should work with an experienced tax professional who can review their VAT invoice compliance on a random basis to reduce potential risks. BDO in China is experienced in providing international and national tax services. We will follow the rapidly changing Chinese regulatory environment and keep clients posted on the changes.