For the majority of those employed in China by a legitimate company, you will be paying some amount of income tax to the Chinese government. How much you pay on your taxes has a lot to do with whether you take advantage of the fapiao policy at your workplace, which can be a huge incentive for foreigners to be employed in China!
What is a Chinese Fapiao?
Before we talk about the savings you can reach with the fapiao, let’s first talk about what exactly the fapiao is. A fapiao is a government-official receipt that you can ask to receive from any purchase made in China. The fapiao is different from the typical receipt you always receive from a transaction in that it is printed on a special kind of paper, perforated on the sides and with two, big red stamps.
You can receive a fapiao for nearly any activity, including grocery shopping, transportation like taxi, train, flight, as well as from paying your rent. This fapiao paper must then be presented to your employer before pay day, who will file it so that you can reach your tax savings.
Where Can I Get a Chinese Fapiao?
You can ask for a fapiao any time you make a purchase. Typically, there is a special counter in most grocery stores and supermarkets for the issuance of these receipts. All you need to do is say “fapiao” pronounced “fah-pee-ow” and they will direct you in where to go next.
Your employer will give you the details that you will need to present to the person printing your fapiao. Oftentimes, this is just the official registered name of the company and an ID number. You can save this in your phone or print out and laminate a paper that has these details already listed for easy access. To learn more, I explain how to use the fapiao in this video!
How Much Fapiao do I Need?
As mentioned, the fapiao is used as a way to save on taxes by reducing your amount of taxable income. Your employer will tell you how much “fapiao” money you need to max out your tax reductions. Anything above that number will not further reduce your income tax.
Let’s say you make around 20,000 RMB per month. It is likely that you will be able to collect up to 5,000 RMB in fapiao to reduce your taxable income. This can essentially cut the amount of taxes you pay by more than half, from about 2,500 RMB to about 1,000 RMB. Again, work with your financial department or HR at your company to find the exact number that fits your income. The higher the income, the more fapiao you are able to collect and turn in!
The rules for the fapiao change quite often, so it’s good to stay in touch with your financial department to make sure you are still on track to maximise your tax savings.
Can I Use All Fapiaos?
Not all fapiaos are created equal. Unfortunately, there are limits to what kind of fapiaos you can use and how much. Here are some exclusions on fapiaos: fapiaos from the purchase of tech products, fapiaos for the purchase of alcohol, fapiaos for the purchase of transportation vehicles such as a new bike, e-bike, etc.
We’ve got some easy tricks to make gains in your fapiao number. For those of you who travel often for work, you can collect up to 2,000 RMB per month in travel fapiao. For those who are paying rent for an apartment, you can receive a fapiao from your landlord or the tax bureau, which can oftentimes equate to the number you need to hit for the monthly fapiao collection altogether!
Tips for Reaching Your Fapiao Cap Each Month
When looking for an apartment, it is important to confirm with your landlord that you will be able to receive a fapiao for your rent paid. Oftentimes, this can be the majority of the amount of fapiao you need to collect for each month of taxes.
Here are some other easy tips to collect more fapiao:
- When dining out with friends, ask if anyone else needs a fapiao for the meal. If not, ask for one fapiao for the entire meal, as this can often be upwards 1,000 – 2,000 RMB!
- Don’t forget to ask for the fapiao when taking a taxi or purchasing a flight to and from China. All flights purchased through a Chinese company/agent/airline are considered eligible for savings. I book all my flights through trip.com and ask for a fapiao after booking. They will email you your fapiao quickly.
Kristine Thorndyke is a homeroom teacher at an international school in Shanghai. She is also the owner of Test Prep Nerds, the premier resource for those considering admissions to college, grad school, and more. They are currently the #1 resource for MCAT prep and can help you find the right courses and resources to suit your learning style.