Has recent news regarding China's e-fapiao left you feeling slightly puzzled? As the new pilot program is accepted amongst a growing number of provinces, it's only a matter of time before your business needs to adapt to the unique e-invoicing system. Fortunately, the advantages of the new program don't have to come paired with uncertainty. Here's what you need to know about the government-generated digital data invoice pilot and its implementation.
What is a fully digitised e-fapiao?
China's novel e-fapiao aims to replace the paper-based invoicing system, which has proven significantly challenging to navigate in a fast-evolving economy. The new mandatory e-invoicing system (e-fapiao) offers a fresh approach to e-invoicing. Yet, still carries the same legal effect as traditional (paper-based) invoices and the previous standard value-added tax e-invoicing system.
The pilot program and shift towards fully digitised e-fapiao kicked off on 1 December 2021. During this initial stage, selected taxpayers in Shanghai, Guangdong (Guangzhou, Foshan, Guangdong-Macau Intensive Cooperation Zone), and Inner Mongolia (Hohhot) started to issue and accept fully digitalized e-fapiao.
Since the initial roll-out, the pilot program has continuously expanded, with an ever-growing number of taxpayers included in the scope of issuing and accepting fully digitalised e-fapiao.
But what is it exactly?
E-fapiao is trademarked by its unique digital signature and is governed by the regional Taxation Bureaus, with invoices processed and checked via the national unified invoice application. Although they can be based on either PDF or OFD formats, the requirements clearly stipulate that they must include a QR code. The platform generates a unique digital invoice number for each submitted invoice. The invoice is then returned to the seller and their customer through their login accounts.
The new features of fully digitised e-fapiao
"A new type of e-invoice" can feel terrifyingly vague - especially if you need to adjust your entire e-invoicing process to adapt to the new system. To avoid any missteps, misinterpretations, or misguidance; here are the unique core features that will be included in the fully digitised e-fapiao;
Taxpayers under the pilot program can issue the fully digitalised e-fapiao on the national e-invoicing service platform. This means they do not have to acquire additional equipment to issue a fapiao.
Under the pilot program, taxpayers will not be required to obtain the fapiao through application to the tax bureaus. Instead, they can receive the fully digitalised e-fapiao directly from the service platform and be assigned a unique fapiao number when the information is generated.
The tax authorities will vet each taxpayer. This process will determine the initial maximum amount of invoice issues allowed per taxpayer in a calendar month. This decision will be based on a taxpayer's risk level, credit rating, and operating conditions.
Updates regarding the fully digitised e-fapiao roll-out
As of January 2023, the pilot program expanded to include select taxpayers in Chongqing, Qingdao, Dalian, Tianjin, and Shaanxi provinces. In the same month, the pilot program also had all newly registered taxpayers in Shanghai into the scope of those eligible to start issuing fully digitalized e-fapiao.
Prepare your business for the new program with VAT IT
Don't wait for your e-fapiao prep to flop before ironing out all the kinks. Prepare for the new system with ease by staying up to date with the latest roll-out updates and requirements. Reach out to our experts today and prep your paper invoices for a smooth transition.
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