Handling fapiao is an important and complex part of managing relocation expenses in China. This distinctive tax documentation system presents multinational corporations with significant compliance hurdles, as employees relocated to China must navigate a complex landscape where nearly every business transaction requires a properly issued fapiao for expense reimbursement and corporate tax deduction purposes.
Organizations must develop comprehensive policies that educate relocating employees about fapiao requirements, establish clear procedures for obtaining and submitting these tax receipts, and implement verification processes that satisfy both Chinese tax authorities and corporate governance standards. Failure to properly integrate fapiao management into relocation policies can result in tax complications, reimbursement delays, and frustrated employees who find themselves caught between corporate expense policies and local regulatory requirements.
What is an E-Fapiao?
An e-fapiao is equivalent to the conventional paper fapiao, in that it is used for the same purpose and is supervised by tax bureaus. However, because of its digital nature, it comes with the added benefits of being easy to store, easy to search for later, and easier to retrieve when needed.
Definition and Issuance- Definition
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E-fapiao is an invoice data message generated, transmitted, and stored in electronic form in accordance with relevant national regulations and standards. It contains all the necessary information on a traditional paper invoice, such as invoice number, invoice date, buyer and seller information, item details, amount, tax amount, etc.
- Issuance:
E-fapiao is issued through the e-fapiao system. After a business transaction occurs, the seller enters the relevant transaction information into the system, which automatically generates an e-fapiao. The e-fapiao can then be sent to the buyer via email, SMS, or other electronic means.
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Format and Storage
- Format:
Usually in PDF, OFD and other formats. These formats ensure the readability and integrity of the invoice and also convenient for printing and archiving if needed.
- Storage:
E-fapiao are stored electronically in the issuer's and recipient's accounting systems or dedicated electronic invoice management systems. They can be backed up on servers, cloud storage, or other storage media to ensure the security and long - term availability of the invoice data.
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E-Fapiao Advantages
- Convenience:
It can be issued and received instantaneously via the internet, without the need for physical delivery, which improves the efficiency of transactions.
- Cost-saving: Reduces the consumption of paper, ink and other materials, as well as the costs of printing, mailing and storage.
- Environmental - friendly: Contributes to environmental protection by reducing paper waste and the associated environmental impact.
- Accuracy: Automated data entry and validation reduce the risk of human - input errors, improving the accuracy of financial records.
- Tax compliance: Facilitates tax authorities' tracking and monitoring of transactions, enhancing tax compliance and simplifying the auditing process.
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Application Scenarios- E-commerce: Widely used for online shopping platforms. When consumers make purchases, e-fapiao can be issued immediately, providing convenience for both consumers and merchants.
- General Business Transactions: Applicable to various business scenarios such as the sale of goods and the provision of services. Whether it is B2B (business to business) or B2C (business to consumer) transactions, e-fapiao can meet the invoicing needs.
- Travel and Hospitality: In the travel and hospitality industry, e-fapiao are often used for hotel reservations, flight bookings, and other services. They can be easily obtained and managed by travelers through electronic channels.
E-fapiao is becoming dominant in the business and financial fields due to several factors: - Wide availability of digital infrastructure
- Advancements in electronic signature and encryption technologies
- Government promotion and policy support
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As mentioned earlier in this post, managing fapiao is an important but complex part of expense management in China. With this in mind, partner with a reliable global employee mobility services provider that has robust client financial expertise and can evaluate and determine how your current program is designed for any inbound/outbound assignments and/or domestic moves. Proper fapiao collection and use is critical for compliance, achieving and providing favorable tax benefits, and ensuring adherence to local regulations.
To learn more about how Sirva can help your company conduct a thorough review of your company’s expense management, designed to help ease the financial burden on organizations and their relocating employees, contact us at concierge@sirva.com.
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