Svat system license#
Svat system series#

Bookkeeping copy – the bookkeeping voucher for the issuer.The buyer may then use this Special VAT fapiao to offset his or her VAT liability.Ī Special VAT invoice comprises three copies, as follows: These invoices need to state the sales amount and output VAT of the transaction. General Taxpayers must issue Special VAT fapiao when selling goods or services covered by VAT to customers other than consumers. Small-scale taxpayers are subject to a lower uniform VAT rate of three percent (as compared to rates ranging from 6 to 17 percent for General Taxpayers) but they cannot credit input VAT from output VAT, nor are they entitled to VAT export exemptions and refunds. RELATED: General VAT Taxpayer Status: Why It’s So Critical Taxpayers with annual taxable sales exceeding the annual sales ceiling set for small-scale taxpayers must apply for General Taxpayer status. VAT taxpayers are categorized into General Taxpayers and small-scale taxpayers based on their annual taxable sales amount. The two taxes are generally not mutually deductible. Conversely, BT is levied on gross turnover with no deduction permitted for tax paid on the purchase of other goods or services. VAT is considered a neutral tax, allowing businesses to offset VAT incurred on relevant purchases from their own VAT liability. VAT is one of three major indirect taxes in China, the other two being business tax (BT) and consumption tax. Further, there are two types of VAT fapiao: Special VAT fapiao for VAT-covered transactions, issued by a General Taxpayer to another business and regular VAT fapiao, for all other instances, including sales to consumers, VAT-covered transactions done by small scale taxpayers (more below) or sales of tax-free goods and services. Transactions covered under China’s Value-added Tax (VAT) system need to be printed on a different type of fapiao than those that are not. The fapiao system is one means to enforce this requirement, as a company cannot issue fapiao for activities outside its business scope in turn, if its customers are unable to receive fapiao, they will be unable to declare their purchases as expenses. When a company is incorporated, it needs to state what activities it intends to perform on its business license, and keep its actual operations within this scope. RELATED: Understanding China’s ‘Fapiao’ Invoice System

Svat system license#

For this reason, when a company first applies for a license to issue fapiao, the tax authorities will look at the company’s size and business scope to decide what kind and how many fapiao the company may legally issue. This also means that employees must submit official fapiao to declare expenses for reimbursement from their employer.Ī company may only issue a fapiao if the transaction is within that company’s business scope.

If a transaction is not printed on an official fapiao, the authorities will not recognize it, and the enterprise will be unable to use the expense for tax deductions or refunds. In China, all business transactions are required by law to be recorded on an official receipt (or ‘fapiao’ in Chinese).įapiao differ from regular receipts in that they are printed on special paper that must be purchased from the tax authorities.

Svat system series#

This article is additional unpublished content from our latest issue of China Briefing Magazine, titled “ Managing Your Accounting and Bookkeeping in China.” The second part of this series goes into printing fapiao.įor those new to China, the fapiao system can be an especially confusing part of domestic bookkeeping.