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The Chinese special VAT e-fapiao

Foreign multinational groups and entrepreneurs shall understand the Chinese invoicing system when entering and doing business in China. An invoice is a document used in accounting to support transactions such as sales, purchases, and expenses and to claim the deduction of the value-added tax (VAT).

In China, the invoice, called fapiao, can be classified into:

  1. General VAT fapiao, that can be issued by any company property established in China and registered with the competent tax bureau; and

  2. Special VAT fapiao, which can be issued only by general VAT taxpayers only and that, differently from the general VAT fapiao, can be used to claim VAT deduction.

In the past, the Chinese fapiao system was wholly paper-based since the taxpayers were allowed to issue fapiao only by using the blank sheets provided by the local tax bureau within the stipulated quota and amount.

From 2015, to create a more dynamic business environment, the State Administration of Taxation implemented an e-fapiao system, allowing enrolled taxpayers to issue fapiao in a digital form with the same legal effects as the paper fapiao, and with the electronic signature replacing the traditional fapiao seal.

However, the purpose of the new e-fapiao was limited to the general VAT e-fapiao only, and taxpayers operating in B2C industries such as retail, F&B, travel, e-commerce, and transportation welcomed and widely adopted the new e-fapiao system. On the other hand, taxpayers operating in B2B industries employing special VAT fapiao for claiming VAT deductions continued to use the paper-based fapiao.

In July 2020, the General Office of the State Council issued the “Implementing Opinions on Further Optimizing the Business Environment to Better Serve Market Players” (Guo Ban Fa [2020] No.24), aimed to develop the digitalization of the companies further and extend the electronic invoicing also to the special VAT fapiao.

From September 2020, three pilot cities (Ningbo, Shijiazhuang, and Hangzhou) started to implement a special VAT e-fapiao system locally. Afterward, in December 2020, the State Administration of Taxation issued the Announcement on Matters Concerning the Implementation of Electronic Special VAT Invoices for New Taxpayers (SAT Announcement [2020] No.22), that extended the special VAT e-fapiao system to new taxpayers in eleven regions (Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Guangdong, Chongqing, Sichuan, Ningbo, and Shenzhen) from December 21st, 2020, and to 25 additional regions (Beijing, Shanxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangxi, Hainan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Dalian, Xiamen and Qingdao) starting from January 21, 2021.

New taxpayers qualified to be enrolled in the pilot implementation were provided with a tax U-key free of charge, allowing them to issue special VAT e-fapiao through the public platform made available by the tax authorities. Despite the digitalization of the fapiao, enrolled taxpayers would still be subject to the limits, in terms of quota and amount, set by the locally competent tax bureau. It shall be noted that enrolled taxpayers are still allowed to issue also paper-based special VAT fapiao.

The recipient of the special VAT e-fapiao can check the information and the validity of the electronic signatures included in the document through the VAT fapiao verification system, which is available at the link (, and by downloading the e-fapiao reader software.

Special VAT e-fapiao issued by the enrolled taxpayers have the same legal effect and usage of the paper version, with some additional advantages: e-fapiao are more convenient, reliable, cost-effective, eco-friendly, and since they can be delivered much faster than the previous paper version, companies will be able to speed up the settlement of transactions, shorten payments cycles and to improve the digitalization of their activities.

The special VAT e-fapiao will be soon extended to all the taxpayers nationwide after the pilot implementation, and existing companies shall be prepared to manage and digitalize part of their processes.

Figure 1 Sample of special VAT e-fapiao.


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