A fapiao is the invoice the Chinese tax system recognises. It is not a receipt, not a sales slip, and not an order confirmation, no matter how official the receipt looks. For a foreign business the difference is expensive and specific: an expense backed by a fapiao can be deducted, an expense backed by anything else usually cannot. This note explains what a fapiao is, what has to be printed on it for it to count, and where foreign companies most often lose money.
What a fapiao actually is
Under the Measures for the Administration of Invoices (State Council Order No. 764 of 2023, the third revision of the 1993 rules), a fapiao is the voucher issued and received in the course of business under the invoice administration system, supervised by the tax authorities. Article 3 puts paper and electronic invoices on the same legal footing: an electronic fapiao has the same legal effect as a paper one.
Two features separate it from a commercial receipt. First, it is issued through infrastructure controlled or authorised by the tax authority, not by the seller’s own till. Second, it is linked to a tax return: the seller has declared output VAT against it, and that declaration is what allows you to claim the corresponding input VAT. A receipt has neither feature. Article 23 is blunt about the substitution — using another document in place of a fapiao is listed among the prohibited uses of invoices.
Why it decides whether you get the money back
Four things turn on the document, and they fail separately:
- Input VAT credit. A general VAT taxpayer normally credits input VAT only where a valid special VAT invoice shows it. A general invoice usually carries no deductible VAT, so it leaves the VAT sitting in your cost. There are narrow exceptions — road toll and domestic passenger transport e-invoices, for instance, carry creditable VAT despite being general invoices — but they are exceptions, not the rule. See the rate schedule in China VAT rates.
- Corporate income tax deduction. An expense needs a compliant invoice to be deducted. Without one, the amount is added back and taxed at 25 per cent, or at the reduced rate that applies to your business — see China corporate income tax rates.
- Export refunds. Export VAT refund claims are matched against invoice data. A gap in the chain is a refund denied.
- Internal reimbursement and audit. Group finance teams outside China usually refuse to book the expense at all, which turns a tax problem into a cash problem.
The arithmetic is not subtle. A CNY 106,000 service fee with 6 per cent VAT carries CNY 6,000 of input VAT and CNY 100,000 of deductible cost. Lose the invoice and a 25 per cent taxpayer loses the CNY 6,000 credit and pays CNY 25,000 more income tax on the disallowed cost: CNY 31,000 gone on a CNY 106,000 payment, roughly 29 per cent of the outlay.
The single most expensive defect: an invoice without your tax identification number is not a tax voucher. Since 1 July 2017, where the buyer is an enterprise, the seller must record the buyer’s taxpayer identification number or Unified Social Credit Code in the designated field, and an invoice that fails this cannot be used for tax purposes — assessment, refund or credit (STA Announcement No. 16 of 2017).
What has to be on it
The revised measures require invoices to be issued truthfully, in the prescribed sequence and with every required field complete (Article 21). In practice, four checks catch most problems:
- Buyer name exactly as registered, not a shortened trading name and never an individual’s name. Invoices without the full payer name have been ruled unusable for pre-tax deduction, VAT credit, export refund and reimbursement (STA Circular [2008] No. 80, Article 8).
- Tax identification number — your Unified Social Credit Code, 18 characters, matching the business licence.
- Items, quantity and rate describing what was actually supplied. A software subscription cannot be invoiced as “office supplies”, and the buyer cannot ask for the description to be changed.
- The seal. Paper invoices must carry the seller’s special invoice seal. Electronic invoices do not — and neither do the fully digitalised invoices described below.
Special VAT invoice versus general invoice
| Point | Special VAT invoice | General invoice |
|---|---|---|
| Input VAT credit | Yes, for a general taxpayer | No |
| Buyer details | Full name, tax ID, address, bank details | Name and tax ID required in practice |
| Typical use | B2B purchases of goods and services | Consumer-facing sales, expenses with no credit |
| Issued by small-scale sellers | Possible, but at the reduced levy rate rather than the standard rate | Yes, at the levy rate |
Ask for the special invoice whenever you are a general taxpayer and the purchase carries creditable VAT. Suppliers sometimes default to a general invoice because it is simpler for them. That default costs you the credit, and it is worth correcting at the purchase order stage rather than after payment.
The fully digitalised invoice
Since the nationwide roll-out under STA Announcement No. 11 of 2024 (issued 12 November 2024), the default instrument is the fully digitalised electronic invoice, known in practice as the digital fapiao. Four details matter to a foreign finance team:
- It exists in a single copy, digitally, with no paper counterpart and no invoice seal.
- The number is 20 digits: the first two are the year, the next two the provincial tax region, the fifth the issuing channel, and the remainder a sequence.
- Each taxpayer is given a monthly total issuance quota in renminbi, excluding VAT, adjusted dynamically according to risk rating, credit rating and actual business. A supplier near its quota limit may stall on issuing — a real operational risk at quarter end.
- Categories include the special VAT invoice, the general invoice, air tickets and rail tickets, all in digital form.
Delivery is by download, email or QR code from the tax digital account, and authenticity can be checked against the tax authority’s verification service. A PDF that a supplier emails you is not, by itself, proof of anything: verify the number.
Five mistakes that cost foreign companies money
| Mistake | What it costs | Fix |
|---|---|---|
| Accepting a hotel or restaurant receipt as the invoice | Whole expense disallowed | Ask for the fapiao at checkout, before leaving the counter |
| Invoice issued to the individual employee | No deduction, no credit | Give the seller the company name and tax ID in writing |
| Invoice to a group company that did not contract | Mismatch flagged in audit | Invoice must follow the contracting entity |
| Description altered to something deductible | Treated as false invoicing, with penalties | Leave the description as the supply actually was |
| Filing the PDF without verifying it | Discovered at audit, years later | Check the number on the tax authority’s verification service |
When the supplier will not issue one
The obligation runs the other way round from most countries: the seller must issue the invoice to the payer when payment is received (Article 18). Refusal is a breach by the seller, not a negotiating position. Practical steps, in order: request it in writing referencing the contract; escalate to the seller’s finance contact rather than the account manager; report the refusal through the 12366 taxpayer service line; and, where the seller is a small-scale operator unable to self-issue, ask the tax authority about issuance on the seller’s behalf. What you should not do is book the expense and hope: an unrecovered input credit is money paid, and it does not come back after the filing period closes.
Where practice varies
Two points are genuinely local. First, particular business categories — immovable property leases and sales, construction services, transport — require specific content in the remarks field of the invoice, and the exact wording is applied by provincial authorities. Second, the handling of invoices issued across provinces, and of invoices issued on behalf of individuals, differs in documentation requirements between localities. Where we know of a divergence we say so; where we do not, assume your filing locality sets the standard and confirm with the 12366 line before relying on it.
What this note does not cover
This is an introduction to the instrument, not a procedure manual. It does not cover invoice issuance software, red-letter (credit note) procedures, the treatment of invoices in a tax audit, industry-specific invoice rules, or the VAT treatment of the underlying supplies. It also does not address the position of an individual who is not registered for tax in China.
Sources and effective dates
- State Council Order No. 764 of 2023 — third revision of the Measures for the Administration of Invoices; Articles 3, 18, 21 and 23 are cited above. Sources differ on the exact commencement date (21 August 2023 in the tax press, 20 July 2023 in some government databases); the revised text applies either way, and no conclusion in this note depends on which date is right.
- STA Announcement No. 16 of 2017 — invoice issuance requirements; issued 19 May 2017, effective 1 July 2017; still applied.
- STA Announcement No. 11 of 2024 — nationwide roll-out of fully digitalised electronic invoices; issued 12 November 2024.
- STA Circular [2008] No. 80, Article 8 — invoices lacking the full payer name cannot be used for pre-tax deduction, VAT credit, export refund or reimbursement; still cited by provincial tax authorities.
- Measures for the Administration of Invoices — implementing rules (STA Order No. 37) — field-level completion requirements.
Checked against the texts above in November 2026. Confirm the current version before filing.