Fapiao Frenzy: Why You Need Those Pesky Pieces of Paper

Fapiao Frenzy: Why You Need Those Pesky Pieces of Paper
Feb 10, 2010 By Mary Katherine Smith, eChin , eChinacities.com

One of the most befuddling things in China is the elusive fapiao. What might seem like a nuisance piece of paper is actually quite useful for business travelers and expats in China. Some might say that the fapiao is just a receipt, but it’s actually a bit more than that. Not only can you potentially win some money from the “scratch and sniff” fapiao, but sometimes you will be required to give them to your employer. For those with expense accounts, fapiao is how you are reimbursed for your travel, food or other purchases. From your favorite local restaurant to your barber down the street to your cab driver, consumers are urged to get fapiao whenever possible. This might seem obvious enough, but there are different kinds of receipts and being able to distinguish proper fapiao can mean the difference between getting reimbursed for your expenses and having to pay your minibar bill out of your own pocket. Keep in mind that there is a big difference between a handwritten receipt (generally not official unless it has the proper stamps) and the printed kind in the picture below (official).

Photo: yujanlee

Different kinds of fapiao
The Chinese government created the fapiao system in order to deter tax evasion. Some fapiao are printed off while others are issued in predetermined denominations. For those shops, restaurants or anywhere else that uses the pre-made fapiao, it is especially important the customers ask for fapiao because these fapiao are usually bought from the government. The sooner the venue runs out, the sooner they have to buy more fapiao. Thus, they won’t give them to you unless you specifically ask for the fapiao, and sometimes you have to ask twice. However, there are a few venues where fapiao are usually not issued, like the local noodle place. Don’t be surprised if you can’t get an official receipt for the bowl of noodles or the plate of fried rice from the hole in the wall restaurant down the street. You shouldn’t be surprised either if some businesses will go out of their way to avoid giving you an official fapiao. When they issue official receipts they have to report and pay taxes on the sale and many companies loathe to do so, and will go so far as to tell you they are out and you’ll need to come back tomorrow. If you do show up the next day, don’t count on getting a receipt then either. It is worth noting for those of us not on expense accounts, that you can trade the fapiao for a slight discount (usually around the 6% the company will pay in taxes for issuing one).

There are also fapiao for transportation. Taxis, buses and metros all offer fapiao. Many times your employer will ask for these; collecting these is crucial for those with expense accounts who want their taxi ride with a client reimbursed. However, these receipts are also helpful, especially when you’re in a taxi. Since most cab drivers are in a rush to get you out and get the next rider in, by asking the driver for fapiao you can buy yourself a few extra moments to make sure you are not leaving anything behind. You will also get the taxi’s number in case you did leave anything behind.

An important fapiao issue to settle is with your landlord. It’s important that your landlord pays the appropriate taxes on your home or flat and that you receive the fapiao. While you might not need the fapiao immediately after you move in, making sure that you have this important piece of paper will help alleviate problems in the future. As you will read below, many employers need your apartment-related fapiao when filing your taxes.

Fapiaos come in both individual and business flavors. Officially, there is not much difference between the two except that the business ones have your company’s name written or printed on them by the business issuing it. This takes longer and shouldn’t make much of a difference legally, but be sure to check with your accountant or accounting department to see which they prefer.

Why you need your fapiao
Different companies have different rules for submitting fapiao. Some employers withhold a portion of the salary and require employees to turn in a certain amount of food and transportation fapiao in order to retain the withheld amount. This is supposed to help with the tax evasion issue (and some might argue, a way to make their bottom line). Other companies require employees to turn in receipts for tax breaks. This is especially important for foreigners, considering our taxes are configured much differently than the local Chinese. In some cases, employers even require fapiao for your housing, which you can get from your landlord. It’s best to get clarification early on from your employer about what your fapiao requirements are. You don’t want to be scrambling for fapiao at the end of the month. Keep in mind that some landlords do not want to be on the books as officially renting their properties, particularly to foreigners, because they’re looking to avoid paying taxes. This is problematic when it comes to both receipts and residency permits so make sure you settle the issue of official registration and receipts before you sign a lease.

Another incentive for you to get your fapiao (as if potentially not receiving your full salary wasn’t enough) is the prospect of additional money that comes with the fapiao. The government cleverly developed a “scratch-and-sniff”-kind-of scheme to encourage consumers to ask for fapiao – there is a special box on the fapiao which you scratch off to potentially win some money. Usually they just read 谢谢您, or “thank you,” but sometimes you can win anywhere from a few to a few hundred RMB, which the restaurant should pay back to you then and there.

Fake fapiao
We love our fake goods here in China, but fake fapiao is probably the last thing you want to fake. If you find yourself short on fapiao for the month or year, it is easy to find fake fapiao, however, it is said fakes are relatively easy to spot. It’s also important to remember that using fake fapiao is essentially a form of tax evasion, and just like at home, it’s not a good idea here in China either. Official fapiao are stamped twice with official seals from the issuing tax bureau and company; there are plenty of ways to determine that the receipt you’re claiming is for a hotel in Sanya is really from a massage parlour in Ningbo. To avoid serious repercussions for fraud, it is advisable to try to avoid the fake fapiao. What’s better: a few less RMB a month or deportation?

Fapiao may still seem like an enigma, and collecting and figuring out the use of fapiao may seem like a chore. And while your server might roll their eyes and groan when you say “fapiao,” it’s important to ask for it and get it. You may find that it’ll be useful for you in the long run.


Related Links

2010 Expatriate Income Tax Planning in China
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China's Corporate Tax Audit Considerations

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