China Introduces Electronic Invoices for VAT Payments

The State Taxation Administration (STA) of China released a report containing a list of eligible regions where taxpayers who have been newly registered may utilize electronic VAT special invoices, “e-fapiao.” This is an amendment to the formerly used system, “fapiao,” in which all VAT special invoices were submitted in paper form.

The new electronic version essentially has the same statutory components of the original. However, the VAT “e- fapiao” are vastly less complicated to obtain, implement, monitor, and validate. The introduction of these VAT special invoices was one integral part of China’s overall initiatives to transition the entire fapiao system to an electronic structure.

The eligible regions are listed below:

Effective December 21st, 2020, the 11 regions below were permitted to utilize electronic VAT special invoices:

• Anhui, Guangdong, Hebei, Jiangsu, Chongqing, Shenzhen, Sichuan, Tianjin, Zhejiang, Ningbo, and Shanghai

Effective January 21st, 2021, the additional 25 regions below were permitted to utilize electronic VAT special invoices:

• Shanxi, Dalian, Fujian, Gansu, Guangxi, Yunnan, Guizhou, Hainan, Beijing, Heilongjiang, Henan, Hubei, Hunan, Inner Mongolia, Jiangxi, Jilin, Liaoning, Ningxia, , Qinghai, Shaanxi, Shandong, Tibet, Xiamen, Xinjiang, and Qingdao

Employer Considerations:

As of January 21st, 2021, 36 regions in China have been eligible to utilize these simplified, electronic VAT special invoices. Additional conditions may be imposed by tax authorities by region.