What is a fapiao?

The fapiao trips up nearly every foreign business operating in China, and the confusion is usually about which document does which job. There are two entirely separate invoice concepts in play — one for the Chinese tax system and one for international trade — and they are not interchangeable.

Fapiao and commercial invoice are different documents

Document	Issued by	What it is for
Fapiao (发票)	The seller, through China’s official tax invoicing system	Chinese tax: expense deduction, VAT credit, and proof the transaction was declared
Commercial invoice	The seller, on its own paper	International trade: customs clearance, payment, and the shipping document set

An overseas buyer importing goods needs the commercial invoice and does not generally need a fapiao at all, because they have no Chinese tax position for it to serve. A Chinese entity buying anything — including your Chinese subsidiary paying a local landlord or supplier — does need one, and without it the expense is not deductible.

Why suppliers sometimes resist issuing one

Because issuing a fapiao declares the revenue. A quoted price is sometimes "without fapiao", with a higher price if one is required — the difference reflecting tax that would otherwise not be paid. It is worth being clear that accepting the cheaper option means participating in the supplier’s tax position, and that your own entity then has an undeductible expense and no documentary support for it.

Types you may encounter

• Special VAT fapiao — allows a general-taxpayer entity to claim an input VAT credit. The one a Chinese business normally wants.
• General fapiao — supports the expense deduction but carries no input VAT credit.
• Electronic fapiao — China has moved substantially to fully digitised invoicing, and the paper form is progressively less common.

What to hold on to

Fapiao must be kept, correctly titled to the buying entity — the registered Chinese name and tax number, not a trading name. A fapiao made out to the wrong entity is not usable by either of them. For a foreign-invested company this is a routine bookkeeping obligation performed by a licensed accounting firm; the point to understand as a manager is that the document is a tax record, and that a missing one is a real cost rather than an administrative annoyance.

A note on scope

Tax filing, bookkeeping and advice on VAT treatment are performed by licensed firms, not by a consultancy. What is useful to know as a buyer or a manager is which document does what, and to raise the question early enough that it is priced rather than argued about.