VAT and fapiao
China uses VAT with different rates depending on goods/services. Official tax invoices (fapiao) are required for many business transactions and VAT deductions. Issuing or accepting fake fapiao is a serious offence. Set up invoicing with your tax adviser before you trade.
Withholding and permanent establishment
Payments to foreign companies for services, royalties, interest or dividends may attract withholding tax. Sending staff to China or having a dependent agent can create a permanent establishment. Tax treaties may reduce rates, but you need the paperwork.
Compliance basics
Register with the tax bureau, file returns on time, keep accounting records and reconcile bank flows. If you hire staff, handle individual income tax and social insurance. Transfer pricing rules apply to related-party transactions; document them.
Reality check
Fake fapiao is not a paperwork issue; it is a criminal risk.
Local tip: Use a local accountant before your first invoice.
Step by step
- Confirm your tax status and VAT rate.
- Set up fapiao/invoicing.
- Register and file returns.
- Review withholding on cross-border payments.
- Document related-party pricing.
- Use a local accountant for filings.
Typical costs
| Item | Cost / note |
|---|---|
| Accounting | US$100–500/month |
| Tax filing | Included/variable |
| Audit | Annual, if required |
Prices are indicative and change. Confirm with the official provider before paying.
Documents to prepare
- Business licence
- Contracts/invoices
- Bank statements
- Tax registration
- Transfer pricing documents
Common mistakes
- Using fake fapiao
- Missing filing deadlines
- Ignoring withholding tax
- No transfer pricing documentation
If things go wrong
- If a client demands a fake invoice, refuse and document it.
- If you receive a tax notice, respond through your accountant.
FAQ
Do I need a Chinese company to sell into China?
Not always; you can export to China or use a distributor, but tax/registration depends on your model. Ask an adviser.
Can I claim input VAT?
Only with compliant fapiao and for eligible business purchases; rules are strict.
Business in China: the field guide
Business travel is still travel: visas, payments and logistics come first. The commercial basics are verification, written terms and patience with process.
Visa and status
Meetings and trade fairs usually require an M/F visa; employment requires a Z visa and work permit. Do not work or get paid on a tourist visa. Keep the invitation letter, itinerary and host company details consistent. If you plan to set up a company, check the negative list and registered-capital rules before you commit.
Verify before you pay
Check the supplier’s business licence, factory address and export history. Order paid samples, agree a written spec and inspect before paying the balance. Avoid paying 100% upfront to a personal account. Use traceable bank channels and keep contracts, invoices and inspection reports.
Tax and invoicing
China uses VAT and official fapiao invoices. Fake fapiao is a criminal risk, not a paperwork shortcut. Cross-border payments may attract withholding tax, and related-party transactions need documentation. Use a local accountant before your first invoice or hire.
Quick checks
- Correct visa for the activity
- Supplier licence and factory verified
- Written PO/spec and inspection plan
- Traceable payment channel
- Local accountant/tax registration arranged
Printable checklist
Print this page or save it as a PDF. Tick each item before you go.
- Business licence
- Contracts/invoices
- Bank statements
- Tax registration
- Transfer pricing documents
- Confirm your tax status and VAT rate.
- Set up fapiao/invoicing.
- Register and file returns.
- Review withholding on cross-border payments.
- Document related-party pricing.
- Use a local accountant for filings.
This guide is a practical summary, not an official or legal document. Rules and prices change. Use the official links below, and confirm with the relevant authority or a qualified professional.
Last verified 2026-10-29. China Handbook is independent and not affiliated with any government. Information is provided for general guidance only.