Regarding Fapiao
I represent a WOFE in Shanghai. We have recently started issuing Fapiao’s to or customers, but have encountered a regulatory problem in that regard. According to the regulations companies are only allowed to issue Fapiao’ s with a maximum face-value of 10.000 RMB at a time to customers for the first six months after the first Fapiao has been issued by the company.
In reality this means that if a company sells a project worth 500.000RMB the company then has to issue 50 Fapiao’s worth 10.000 each to the customer. If the proejcts value is several millions then an enormous amount of Fapiao’s needs to be issued. Most definately the customer wont be pleased with recieving so many Fapiao’s, let alone the administrative mess it is for the issuing company.
Furthermore to make matters even more complicated; the rule is that a company for the first 6 months of operation are only allowed to recieve 25 Fapiao’s at a time from the tax authorities; meaning that the first 25 Fapiao’s must be issued an accounted for before another 25 can be issued. This obviously makes things difficult if for example the company needs to issue Fapiao’s worth more than a million RMB. There will be enormous slack in the billing process, since the company is only allowed 25 Fapiao’s at a time, which of course is pretty shi… for a recently owned company with limited capital.
As far as I know these rules only applies to the first 6 months of operation after the first fapiao has been issued, so I guess its a way of testing the companies ability to generate revenue before allowing the company to move freely. But it makes issuing fapiao’s difficult and time consuming, which obviously is something a new company finds highly annoying.
Anyone who has comments or solutions to this matter??
Thanks
Andreas
July 11th, 2008 at 3:32 pm
i have encountered the same problem…there is no obvious answer other than ask your customers understanding in having a stack of fa piao (not really a problem) and ask them to pay before you raise the fa paio…a contract to say you will provide the fa piao should suffice.
you may know there is the odd bit of vat fraud in china so it’s understandable the authorities have this precaution.
July 11th, 2008 at 10:25 pm
I am not familiar with the case of limited value of fapiao for 6 months, but it does not seem there is any relief for the number of fapiaos issued for quite some time. Our business has busy seasons and low seasons during which the number of fapiao needed vary dramatically…yet after 5 years of accounts demonstrating this predictable pattern, a good realtionship with the tax bureau and multiple efforts, we are still not able to get ‘fapiao relief’ during the peaks. Instead our poor accountants get a workout, running to and from the sui wu ju as often as three times per week.
July 11th, 2008 at 10:27 pm
By the way, is that David Lodge the charming English Fellow who makes point of sale displays?
July 12th, 2008 at 11:33 am
Aaron, right on 2 out of 3 counts…english and making POS displays, wrong on the third though…charming?? I remember you. I’m still mired in making custom illuminated displays for beer and liquor guys. looks like you’ve seen the light and got into something more sane. david@foreverbright.cn if you want to get in touch.
July 14th, 2008 at 10:29 am
Hi Andreas,
Your understanding is correct. Well there is nothing to comment since it’s the way you do things in China. However you may able to approach your local Tax Bureau and apply or negotiate for greater face-value Fapiao.
Thanks. Please do not hesitate to contact us should you have any queries.
SBA Stone Forest Marketing