By Steven Elsinga and Jim Qiao
This article is additional, unpublished content from our latest issue of China Briefing Magazine, titled “Managing Your Accounting and Bookkeeping in China.” Read more in the first article of this series.
Buying Fapiao Paper
Companies need to buy their fapiao paper from the tax authorities. To purchase fapiao, a staff member needs to physically go to the tax office and bring the following items:
- The previous fapiao booklet with unused fapiao (if any)
- The ID card of the employee tasked with making the purchase
- Special fapiao seal
- Tax Registration Certificate
The tax authorities decide the kind and the quantity of fapiao a company may issue, as well as the maximum RMB amount. This decision is based on the company’s size and business scope. Within five days the company will be issued a fapiao booklet. Old, unused fapiao will be replaced.
RELATED: The Importance of Chinese Fapiaos When Doing Your Accounts
Companies need to have a dedicated fapiao seal, registered with the tax authorities. Fapiao that the company issues need to be affixed with this seal.
To purchase Special VAT fapiao, companies need to bring their VAT fapiao authentication device or IC card. The tax authorities give the IC card and other equipment the first time the tax payer applies for a Special VAT fapiao quota. These contain company information such as name, Tax Registration Code, Special VAT fapiao quota and number of Special VAT fapiao printers registered to that company. To purchase new Special VAT fapiao, this device or card needs to be brought along as well. This card or device stores VAT transactions data and is later used to make VAT payments.
Printing Special VAT Fapiao
Special VAT Fapiao can only be printed using a unique printer that is approved by the tax authorities.
As only General Taxpayers can issue Special VAT fapiao, the company needs to have been granted General Taxpayer status. When the company receives approval for General Taxpayer from the tax authorities, it will receive a notice from the tax bureau, the Notice on the Use of a Fapiao Printer.
With this notice, the taxpayer can purchase a computer and fapiao printer from an approved seller. The taxpayer needs to take the computer with printer, the company’s Tax Registration Certificate, the Finance Seal and the Fapiao Seal to the tax bureau. The tax bureau installs the tax software and places a special device inside the computer, then verifies whether the printer has the correct fapiao quotas. The computer and printer will then be registered and activated.
To use the fapiao printer, the company needs to send one or more staff members to the tax office to attend a training course. Trained employees may then use the printer to print fapiao.
This article is additional unpublished content from the March-April issue of China Briefing, titled “Managing Your Accounting and Bookkeeping in China“, in which we discuss the difference between the International Financial Reporting Standards, and the accounting standards mandated by China’s Ministry of Finance. We also pay special attention to the role of foreign currency in accounting, both in remitting funds, and conversion. In an interview with Jenny Liao, Dezan Shira & Associates’ Senior Manager of Corporate Accounting Services in Shanghai, we outline some of the pros and cons of outsourcing one’s accounting function.
Tax, Accounting, and Audit in China 2015
This edition of Tax, Accounting, and Audit in China, updated for 2015, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in China, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate the complex tax and accounting landscape in China in order to effectively manage and strategically plan their China operations.
Strategies for Repatriating Profits from China
In this issue of China Briefing, we guide you through the different channels for repatriating profits, including via intercompany expenses (i.e., charging service fees and royalties to the Chinese subsidiary) and loans. We also cover the requirements and procedures for repatriating dividends, as well as how to take advantage of lowered tax rates under double tax avoidance treaties.
Annual Audit and Compliance in China
In this issue of China Briefing, we discuss annual compliance requirements for foreign-invested enterprises, including wholly-foreign owned enterprises, joint ventures and foreign-invested commercial enterprises, as well as the less demanding requirements for representative offices. We also highlight the most recent tax and legal changes that will significantly influence the way companies do business in China in 2014.