A fapiao is the official invoice generated through the State Taxation Administration's invoicing system — now largely the fully digitalized e-fapiao. Unlike a Western invoice, which is just a payment request a company prints itself, a fapiao is a government-registered tax document. There are two main types: general fapiao, which evidences the expense, and special VAT fapiao, which additionally lets a VAT-registered buyer credit the input VAT against its output VAT.
Why it matters
In China, no fapiao means no deduction: your WFOE cannot book rent, services or purchases as costs for corporate income tax without one, and cannot recover input VAT without a special VAT fapiao. Whether you can issue fapiao at all depends on your registered business scope, which is one reason scope drafting matters at formation. Fapiao discipline is also a fraud signal — a supplier that resists issuing fapiao is dodging tax on the sale, and buying or selling fabricated fapiao is a criminal offense that has ended careers and companies.
How it works in practice
A British consultancy's Shanghai WFOE pays RMB 40,000 monthly rent. The landlord, an individual, offers a discount for skipping the fapiao. The finance team declines: without it, the RMB 480,000 annual rent is non-deductible, costing roughly RMB 120,000 in extra corporate income tax — far more than the discount. The landlord instead obtains fapiao issued through the tax bureau, and the WFOE deducts the full expense.
Common mistakes
- Paying suppliers or landlords without collecting fapiao, then losing the deduction at year end
- Accepting a general fapiao when a special VAT fapiao was needed to recover input VAT
- Letting employees submit screenshots or commercial receipts as expense evidence
- Issuing fapiao for activities outside the registered business scope
- Buying fapiao to inflate costs — treated as tax fraud, with criminal exposure