Final provinces join digital e-invoicing (e-fapiao) pilot

2020 Pilot spreading to all regions

China has now achieved full implementation of its digital e-fapiao system across all provinces. In July 2023, Anhui, Beijing, Guizhou, Hunan, Ningxia, Qinghai, and Shandong began their participation in the nationwide digital invoice trials, which originally started in 2021.

Tibet was the final province to come on board, officially joining the program on December 1, 2023.

The digital e-fapiao replaces the traditional paper and older electronic invoices that required pre-printed, serially numbered forms to manage and prevent VAT fraud. The forthcoming nationwide e-invoicing platform, set to be introduced during the full implementation phase, will handle the submission and exchange of these digital invoices, though the exact launch date is yet to be confirmed.

Participants in the pilot program can now issue certified invoices directly through the e-invoicing service platform. The system generates a unique fapiao number for each invoice, moving away from the previous reliance on pre-printed paper invoices sourced from authorized vendors or the early digital options that required special tax control devices like golden tax USBs, tax control USBs, and tax UKeys.

The streamlined digital e-fapiao includes only essential information, such as:

• Dynamic QR code
• Invoice number
• Issue date
• Buyer details
• Seller details
• Project description
• Specifications and model
• Unit of measure
• Quantity
• Unit price
• Total amount
• Tax rate or levy rate
• Tax amount
• Grand total
• Ad valorem and tax total

Key milestones in the rollout include:

• March 2023: The introduction in Fujian, Henan, Inner Mongolia, Jilin, Ningbo, Shenzhen, and Yunnan
• January 2023: Expansion to Chongqing, Dalian, Qingdao, Shaanxi, and Tianjin, with additional coverage in Shanghai for new taxpayers
• November 2022: Xiamen’s integration into the system
• October 2022: Sichuan’s participation
• August 2022: Adoption by Gansu, Guangxi, Guizhou, Hainan, Heilongjiang, Jilin, Liaoning, Ningxia, Qinghai, Shanxi, Tianjin, Xinjiang, and Yunnan

General and Special Fapiao: Traditional Chinese Paper Invoices

The fapiao is a traditional Chinese invoice, historically issued in paper form and available in two main types:

1. General Fapiao:
   This type of fapiao serves as an accounting voucher, documenting transactions across all business activities, including those involving individuals. Today, most general fapiao have transitioned to electronic versions.
2. Special Fapiao:
   Special fapiao are used to support the VAT component of a transaction, providing proof for the deductibility of VAT. These invoices are exclusively issued by businesses with an annual turnover exceeding RMB 5 million.

Paper Fapiao Invoices

Traditionally, both types of fapiao were issued in paper form. To generate these invoices, businesses had to follow a specific process:

1. Ordering Blank Fapiao Sheets:
   Businesses needed to request blank sheets of specially designed fapiao paper from their local tax bureau within a monthly quota.
2. Printing Transaction Information:
   The transaction details were then printed onto the fapiao sheets using a special printer that was directly linked to and controlled by the tax system.
3. Sealing the Fapiao:
   After printing, the fapiao was sealed with a dedicated fapiao seal, which included the issuer’s name, tax identification code, and other required information.

E-fapiao: Government-Generated Digital Data Invoices

The electronic fapiao, or e-fapiao, is being introduced to replace the traditional paper-based system, which has become increasingly cumbersome with the growth of the economy. The e-fapiao is a fully digital invoice, featuring a unique digital signature. It is regulated by regional Taxation Bureaus, with all invoices processed and verified through the national unified invoice application platform.

E-fapiao can be generated in PDF or OFD formats, but must include a QR code. The platform assigns a unique digital invoice number for each invoice submitted. Once processed, the invoice is sent back to the seller and their customer through their respective online accounts.

Following the successful implementation of general e-fapiao programs and the limited rollout of special e-fapiao in certain sectors, the initiative was expanded in 2020 to cover various B2B transactions in selected regions and cities. It is anticipated that most major regions will mandate the use of special e-fapiao by 2022, with full nationwide adoption expected by 2023.