Already since the beginning of this year, the Chinese government has promoted the upgraded version of the Value Added Tax (VAT) Invoice System, also called the “fapiao” system. A comprehensive and nationwide implementation of the newly recognized General VAT Taxpayers and the newly-established Small-Scale Taxpayers system finally took place on April 1, 2015. For 230.- RMB taxpayers will be provided with a new hard disc, the download link for the software update and the opportunity to participate in a seminar in order to learn the new features.
The new fapiao system has three main functions: verification of input VAT fapiaos, issuance of VAT fapiaos and filing of the tax declaration. In this article we illustrate the most important changes and point out the benefits of the updated VAT invoice system for all taxpayers.
The new integrated system
- Tax payers with more than one invoice system will be able to manage their invoices more conveniently, owing to the newly implemented system integration.
- After the purchaser receives the fapiao he can upload the information directly to the tax authorities for them to verify. The purchaser can choose to input the information into the tax network manually or scan it. This way the tax authority is able to verify invoices faster.
- At the end of each month the tax payer can download a verification report from the tax authority showing the accepted or rejected invoices.
Prevention of counterfeit and false invoices
This change helps the taxpayers to detect counterfeit and false invoices more easily since the upgraded system collects every detail on the invoice. For the authorities this information serves greatly in detecting counterfeit invoices in time.
- Another feature of the new VAT system is the build-in online tax declaration system which allows taxpayers to handle their tax declarations more conveniently. The invoice issuer will not need to go to the tax bureau anymore in order to transfer the data to a hard disc. The new software allows the handling of all procedures with the computer.
- When before different VAT fapiaos had to be issued with different systems, now one system can be used for all types of VAT fapiaos.
- When issuing VAT invoices using the upgraded system, the invoice details will be sent to the tax authority automatically, in order to match their information. Besides, invoices can be issued offline, but once exceeding the limit, the system will shut down its functions. This is another way of detecting false invoices.
Easier handling of rejected or wrongly issued fapiaos
The new system further simplifies the procedure of the rejected or wrongly issued fapiaos, the so called Red Special VAT invoices. Before, when fapiaos had not yet been delivered to the purchaser, the purchaser refused to receive them or they were falsely issued, the tax payer had to go through a complex procedure. With the upgraded system the taxpayer simply has to complete a form online and upload it to the system. He no longer needs to obtain a notice from the tax authority after the data check, but will be provided with a notice from the system. If the information matches, then Red Special VAT invoices can be issued immediately.
The upgraded version of the VAT fapiao system introduces online tax declaration for all tax payers. It allows tax payers to receive monthly verification reports, makes their tax declaration more convenient and prevents counterfeit and false invoices.
For further information about fapiao handling and a guide to tax declaration in China, take a look at our previous articles, such as “How to calculate VAT & surcharges in China” or “Less bureaucracy! No VAT general tax payer approval necessary”, or contact us! ECOVIS Beijing can help you not only with your tax declaration, but also optimize your accounting and help your company save money.
Grace Shi is a partner at ECOVIS Beijing China. She has over 12 years of experience in accounting, auditing, and tax advisory services in both international accounting firms and large Chinese corporations. She has an international MBA and a US Global Finance Master’s degree. Since 2001, she is a Chinese Certified Public Accountant (CPA) and, since 2002, a Chinese Certified Taxation Agent (CTA). Mrs. Shi is one of the founders of ECOVIS R&G Consulting Ltd. (Beijing). She has perfect skills in written and spoken English and Chinese. For more information, please contact: firstname.lastname@example.org
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