Invoicing and Tax regulation in China
Invoicing Regulation in China
In China, businesses are required by law to issue Special Value-Added Tax (VAT) invoices (known as
fapiao) to their customers for sales transactions. All entities, including B2B, B2C, and B2G, must adhere to the Chinese taxation bureau guidelines and maintain a robust paper trail of invoices.
Real-Time Reporting / Fiscalization
Real-time reporting or fiscalization isn't mandatory in China, nonetheless, businesses ought to have a robust financial reporting system to sustain tax audits and following regulatory changes. Digital reporting and information exchanges are increasingly being encouraged.
E-Invoicing in China
Effective from 1 January 2022, e-invoicing is mandatory in China, with the State Taxation Administration introducing electronic special VAT invoices called "E-SVATI". Hence, businesses need to adapt to e-invoicing for compliance with national taxation practices.
Regarding tax compliance, China operates a VAT system with standard, reduced, and zero rates applicable depending upon the type of goods or services. The standard VAT rate is 13%, while reduced rates are 9% and 6%. This VAT regime applies to B2B, B2C, and B2G transactions. Strict compliance with VAT requirements is necessary to avoid legal repercussions and penalties.