What You Need to Know About China’s VAT Fapiao (Part II)

China’s Value Added Tax (VAT) regime is complex. Here are the must-know essentials about the infamous VAT fapiao. Following the first part about what VAT Fapiao is and what problems might be caused if you overlook them. Here is the second part talking about how to tackle this VAT Fapiao issue.

The way to solve the Fapiao hustle

Through the cloud accounting software, the accountant and the client are able to have the real time access to one set of Fapiao and VAT information, making it easy for them to share documents status and to cooperate to prevent small issues from growing out of hand. It enables the accountants to monitor Fapiao issuing and receiving status for each transaction to prevent loss and even penalty from improper Fapiao management and control.

1. Traceability

All Fapiao information is linked and can be traced back to the corresponding business transaction. Cloud accounting software also enables data to be drilled down from macro to micro level, if there are problems arising. For example, from overall VAT tax payable, you can drill down to the components of specific input and output fapiao, and corresponding purchase, sales and expense transactions.

Online accounting software is especially important when a business has an outsourcing accountant. After the purchases, the business needs to make sure they receive the input VAT Fapiao with the correct amount and then transfer the Fapiao to the accountant for verifying, bookkeeping and deduction. The online accounting software provides a platform for both the business and the accountant to have real time access to Fapiao information, making sure every input Fapiao is received in time and booked correctly.

On the sales side, the business and the accountant will be able to double check whether the sales Fapiao for a certain transaction has been issued with the correct amount and tax rate in time, and whether the Fapiao has been delivered to the client.

2. Simplicity to deal with VAT fapiao

The input VAT Fapiao needs to be verified within 180 days after the issuing date in order to be deducted. The online accounting software helps the accountant to track the status of the VAT Fapiao all the way from receiving, verifying, to deduction.

After the business tax is replaced with VAT, part of the general Fapiao for expense claims will change into VAT Fapiao. Thus it’s important to sort out VAT Fapiao for the tax deduction purpose. With online accounting software, the employees can enter the basic expense claim information, and then the accountant will collect all the Fapiao and check if the VAT Fapiao is received correctly. For example, the accountant needs to check if the employees have provided all the Fapiao in time for the expense claims and if the VAT Fapiao is provided for a certain transaction. The accountant then needs to record the tax rate for the certain expense claims and compile the information and then carry out the tax deduction. Online accounting software is convenient for tracing the expense claim VAT Fapiao and making sure the tax deduction information is correctly recorded.

3. Communication between clients and accountants

Some businesses will take care of Fapiao printing on their end. However, a lot of business will outsource accounting services completely and keep the fiscal processor at their accountant’s and ask the accountant to take care of Fapiao printing. When Fapiao needs to be issued for a certain transaction, the business can inform the accountant through the notification function in the cloud accounting system, making the communication easy and in time. After the Fapiao is issued, the Fapiao status in the cloud system will change to completely issued or partially issued accordingly, providing a straightforward view of the Fapiao processing procedure.

4. Fapiao information checking

When input Fapiao is being transferred from the business to the accountant, both parties are able to track the status and double check the information through the cloud system to make sure everything is accurate without going through endless emails or phone calls.

5. Tax planning

Cloud accounting system can help to monitor business data and VAT payable amount in a timely manner, assisting the accountant to supervise the tax payment, identify problems in time and advise on tax planning.

With cloud accounting software, accountant walks one natural step forward to engage clients in cloud accounting software and instantly add value by helping them to keep TAX and Fapiao under control. There is a lot to think about while running a business in China. Cloud accounting software opens a new era for Fapiao management in China, helping to make the complicated process clear, simple and easy and removing the hustle for both the accountants and the business owners.


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About Aepoch Advisors

We are a boutique accounting and consulting firm servicing international businesses operating in China. We offers book keeping and business advisory service. We also help our clients select and implement SAAS business applications
Cloud technology significantly reduces cost foreign companies traditionally spent on tax compliance and ERP systems. Our cloud professionals can help with streamlining your management and controling structure, as well as advising you on how to reduce risks and maximize profits with software purposely built for Chinese business. Contact us today to learn more about our services.